THE RELATIVE IMPACT OF REMITTANCES AND FOREIGN DIRECT INVESTMENT ON NIGERIA’S ECONOMIC GROWTH

This study examines the relative impact of remittance and foreign direct investment on Nigeria economic growth for the period 1981-2023. Real gross domestic product growth (RGDPG) is taken as proxy for Nigeria’s Economic growth. The study utilizes the Auto-regressive Distributed Lag (ARDL) technique to investigate the relative impact of remittances and foreign direct investment on Nigeria’s economic growth for both the short and long run term. The long-run ARDL coefficient estimates reveal that remittances is the only variable with statistically significant positive effect on Nigeria’s economic growth with a coefficient estimate of 0.3204 implying a unit rise in remittance leading to 0.32 percent increase in real GDP growth (RGDP). Conversely, FDI, gross capital formation (GCF) and exchange rate exhibited statistically insignificant long-run effects in the estimated model. The result indicates that remittance have a strong and positive long-run influence on Nigeria’s economic growth, suggesting that sustained in flows of remittances funds contribute significantly to the country’s economic growth trajectory. Foreign directs investment (FDI), Gross Capital Formation (GFC) and exchange rate are statistically insignificant, suggesting that their long-term impacts on Nigeria’s GDP growth are weak or unstable within the examined period. On the overall, policy makers are to ensure continuous improvement on remittances channels as a key driver of Nigeria’s economic growth and tackle factors responsible for instability in FDI such as political instability, insecurity, insurgency, volatile business environment amongst others as both remittances and FDI are critical to the long-term Nigeria’s economic growth process.