ABSTRACT
The study seeks to empirically analyse the impact of exchange rate depreciation on foreign direct investment in Nigeria from 1981 -2014. The data for the research study was extracted from CBN statistically bulletin volume 25, 2014 edition. The methodology is ordinary least square were foreign direct investment was regressed on Exchange Rate, Real Gross Domestic Product and Openness of the economy. Some econometrics test were conducted such as the unit Root, Contegration and Vector Autoregressive Model. The unit root result shows that none of the variables were stationary at level, but at first differencing they all became stationary. The contegration result shows that there is no long run relationship among the variables. The vector autoregressive model shows that exchange rate had an impact on economic growth. It is on this note that the researcher recommends amongst others that: policy makers should continue on the part of floating exchange rate policy to enable our domestic currency assume its proper level among the committee of world currencies, for purpose of establishing appreciation in the exchange rate of the naira, to ensure effective economic planning and sustainable growth and development.
ABSTRACT viii
CHAPTER ONE 1
INTRODUCTION 1
1.1 Background of the Study 1
1.2 Statement of the Problem 3
1.3 Research Questions 5
1.4 Objectives of the Study 6
1.5 Hypotheses of the Study 6
1.6 Significance of the Study 6
1.7 Scope and Limitation of the Study 7
CHAPTER TWO 8
LITERATURE REVIEW 8
2.1 Theoretical Literature 8
2.1.1 The Optimal Currency Area (OCA) Theory 9
2.1.2 The Elasticity Theory of Trade and Exchange 10
2.1.3 The Two-Gap Theory 14
2.1.4 The Flow Theory of Capital Movement 15
2.1.5 Dunning Eclectic Theory 16
2.2 Empirical Literature 17
2.2.1 Exchange Rate Levels 21
2.2.2 The Behavioural Pattern of Foreign Direct Investment and Exchange Rate in Nigeria 24
2.2.3 Analysis of the Trends and Behavioural Pattern of the Naira Exchange Rate and Foreign Direct Investment in Nigeria 24
2.2.4 Trends under the Exchange Control Era 25
2.2.5 Trends under the Flexible Exchange Rate 26
2.2.6 Trends under the Deregulated, Fixed and Dual Exchange Rate Regimes 27
2.2.7 Exchange Rate Movements and Foreign Direct Investments 29
CHAPTER THREE 30
RESEARCH METHODOLOGY 30