CHAPTER ONE

1.0 INTRODUCTION
As the world economy continues to experience increased
globalization, Foreign Direct Investment (FDI) becomes
increasingly prominent as a form of international economic
transaction. In broad terms, FDI refers to the cross-border
investment by a resident entity in one economy with the
objective of obtaining a lasting interest in an enterprise
resident in another economy (OECD, 2008). Over the years, it
has been argued that Foreign Direct Investment remains a
veritable means of attracting capital and technical know-how
to improve manufacturing capability in developing countries.
FDI is a key element in international economic integration as
it creates direct, stable and long-lasting links between
economies (Ezenwakwelu, 2015). It encourages the transfer
of technology and know-how between countries and allows
the host economy to promote its products more widely in
international markets. Given the expected role of FDI in
enhancing socioeconomic transformation, countries,
especially developing countries, are generally interested in
attracting it. However, there are counter -arguments that
seek to situate the FDI phenomenon within the context of
the global socio-political-economic order. This school of
thought argues that since most FDIs originate from the
developed economies, the recipient developing countries are
 exposed to the possible risk of exploitation, capital flight,
adopting unsuitable and obsolete technology and
unwholesome trade practices (Lautiera & Moreau, 2012;
Manyuchi, 2017). Most developing countries are therefore
taking steps to improve their scores on the principal factors
influencing the location of choices of foreign direct investors.
Nigeria appears not to be an exception in this endeavor as
there seems to be substantial evidence that suggests the
presence of FDIs in the Nigerian economy and some other
developing African countries (Akinlo, 2004; Awolusi, 2012;
Egwaikhide, 2012 & Markusen & Venables, 2005).

1.1 BACKGROUND OF THE STUDY

It is generally accepted that manufacturing productivity in

Nigeria is low due to several factors. The study seeks to
analyses how much FDI inflows were actually attracted to
Nigeria during the study period and their impact on the
Nigerian manufacturing sector. Research activities on the
relationship between FDI and the manufacturing sector in
Nigeria appear to be rather low. While some of the available
studies concentrated on FDI as a growth inducing phenomenon,
a few others dwelt on its impact on total factor productivity,
resource allocation, impact on indigenous productivity and
distorting local consumption patterns. Manufacturing
productivity in a developing country like Nigeria is an under
researched topic. This may be due in part to the lack of
comprehensive comparable data suitable for analysis. Thus, the
linkage between foreign direct investments (FDI) and
manufacturing productivity in Nigeria is still unclear. It is on
these bases that this research sets out to examine the impact of
FDI on the manufacturing sector of the Nigerian economy. This
paper intends to focus specifically on the impact of FDI on the
manufacturing sector in Nigeria for the period 1981 to 2015.
This 34-year period is considered adequate to reach credible
conclusions in our study. Following this introductory section,
the study proceeds with section two where attention will focus
on the literature review under the following three segments;
conceptual review, theoretical and empirical review. Section
three considered research methodology designed for this
study. In section four, data were presented, analyzed and result
was discussed while the concluding section five contains the
conclusion and recommendations.

1.2 JUSTIFICATION OF THE STUDY

It is expected at the end of the study that:

i. The result of the investigation will be useful and
provide relevant statistical information capable of
yielding advice, suggestions and recommendations.
ii. A model which will assist in the prediction of future
impact of foreign direct investment on the
manufacturing sector in Nigeria
 iii. The test on the individual parameters will show
whether or not each of the explanatory variables has
linear influence on the dependent variable.

1.3 AIM AND OBJECTIVES OF THE STUDIES

1. To study the impact of FDI on the manufacturing sector in
Nigeria stems from the need to ascertain the level of its
importance as a means of moving Nigeria forward
towards global competitiveness and enhanced economic
development.
2. The study seeks to analyses how much FDI inflows were
actually attracted to Nigeria during the study period
and their impact on the Nigerian manufacturing sector.

1.4 SOURCES OF DATA

The source of data collected for this research work was
obtain from Central Bank of Nigeria (CBN) statistics bulletin
between (1981 and 2015). The method of data collection was
solely a secondary data.

1.5 LIMITATION OF THE STUDY

The data used for this project is secondary data, being a

secondary data, it is prone to error. There are some of its
limitations:
I. There is no effective control over the quality of the collection
procedure
ii. Due to the volume of the data, error may arise in processing,
editing, coding and tabulation.
 CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 CONCEPTUAL REVIEW

– Foreign Direct Investment

In terms of conceptual review of Foreign Direct Investment
(FDI), Ogunkola and Jerome (2006, cited in Ozughalu &
Ogwumike (2013) have observed that there are a number of
conceptualizations in the literature concerning FDI. Foreign
direct investment usually takes place when another business
organization in one country obtains all or much of the share
capital of a business organization in another country, often
through merger and acquisition. In corporate governance, it
may be said that ownership of at least 10% of the ordinary
shares or voting stock is a major criterion for the existence of
direct investment relationship; ownership of less than 10% of
the ordinary shares or voting stock is regarded as portfolio
investment (Ayanwale, 2007, cited in Ozughalu and Ogwumike,
2013). FDI refers to investment by multinational companies,
with headquarters in developed countries in other countries
(Thirlwall, 1994, cited in Okaro, 2016). This investment involves
not only a transfer of funds (including the reinvestment of
profits), but also a complete package of physical capital,
production techniques, managerial and marketing expertise,
products advertising and business practices for the
maximization of global profits. It is believed that there are
positive benefits associated with FDI and this has led many
countries that were restricting FDI in the 1960s, 1970s and
1980s to be more open towards FDI in the 1990s and beyond
(Safarian, 2009, cited in Okaro, 2016). FDI refers to investment
made to acquire lasting management interest (usually at least
10% of the voting stock) and acquiring at least 10% of equity
share in an enterprise operating in a country other than the
home country of the investor (Anowor, Ukweni, Ibiam &
Ezekwem, 2013). In terms of types of FDI, Okafor (2012) &
Anyanwu, Aiyedogbon & Ohwofasa (2015) opine that generally,
there are two categories of foreign direct investments; namely
official (public) and private foreign direct investments. Official
foreign direct investments are undertaken at the bilateral and
multilateral levels. The former refers to investment
arrangements between two countries by means of direct
government to government transfers, while the latter relates to
investments originating from such international organizations
such as the IMF and the World Bank to government and private
enterprises. Okaro (2016) regarded FDI as investment in
enterprises to attain permanent management interest (usually
10% of voting stock or ordinary shares) in an enterprise in
another country other than that of the investor residency; such
investment may take the form of either “green field”
investment (also called “mortar and brick” investment) or
merger and acquisition which entails the acquisition of existing
interest rather than new investment.
– Manufacturing Sector
The manufacturing sector of an economy is usually categorized
under Industry. Industry can be said to be “a particular way of
organizing production and assumes there is a constant process
of technical and social change which continually increases
society’s capacity to produce a wide range of goods” (Hewitt et
al/1992a.6, cited in! dejumo, 20 13). The manufacturing sector
is key in the process of industrialization because of its multi-
dimensional benefits to the development process. Some
scholars refer to industrialization in terms of an increase in the
share of the Gross Domestic Product contributed by the
manufacturing sector (Chandra, 1992, cited in Adejumo 2013).
The United Nations Industrial Development Organization
(UNIDO) developed a Competitive Industrial Development
Index. In doing this, UNIDO defined the components of the
index in terms of the attributes of a nation’s manufacturing
sector (UNIDO, 2009). Hence, the industrial development
report identified Manufacturing Value Added (MVA) as one of
the measurements of industrial performance.

2.2 THEORETICAL REVIEW

Most of the early literatures on FDI were based on classical

assumptions as summarized by Orji, Anthony-Orji, Nchege and
Okafor (2015). Classical theory assumption is based on perfect
competitive markets, perfect knowledge and certainty. Classical
trade theory and classical theory of foreign investment
emphasizes that cost of production is preeminent to
international competitiveness. Low-cost factors or natural
resources are one of the more important factors. Modern
growth theory rests on the view that economic growth is the
result of capital accumulation which leads to investment
(Okaro, 2016). Given the overriding importance of an enabling
environment for investment to thrive, it is important to
examine necessary conditions that facilitate FDI inflow. These
are classified into economic, political, social and legal factors.
The economic factors include infrastructural facilities, favorable
fiscal, monetary, trade and exchange rate policies. The degree
of openness of the domestic economy, tariff policy, and credit
provision by a country’s banking system, indigenization policy,
the economy’s growth potentials, market size and
macroeconomic stability. The path of both foreign direct
investment and private capital inflows is explained by two types
of theory namely; push and pull factors theories (Oyejide, 2005,
cited in Anyanwu, et al. 2015). The push factor theories that the
surge of foreign direct investment is contingent on the
increasing tax burden of multinational corporations in their
home countries and due in part to domestic developments such
as sound policies and strong economic performance for private
portfolio investments. On the other hand, the pull factor theory
traces the cause of capital flows to domestic factors such as
autonomous increase in the domestic money demand,
increasing integration of domestic capital markets with the
global capital markets, improvement in external credit
relations, etc. Most theoretical work on FDI by different authors
appear to have been integrated by Dunning (1988, 1993; cited
in Okoli and Agu, 2015) in his ground-breaking Eclectic Theory
commonly referred to as the OLI Paradigm. This theory tries to
explain and analyses the process of spillovers from
multinationals to host country firms through industrial
organizations. Accordingly, this has become the standard
theoretical framework for studies on foreign subsidiaries of
multinational corporations. This approach was adopted as the
Theoretical Framework for this study. Dunning’s Eclectic
Paradigm has been for long an effective framework for
empirical investigation of determinants of foreign direct
investment, though with some inherent weaknesses (Adejumo,
2013). The theory tries to explain FDI and the returns on it by
bringing together a set of three factors. These are: the
ownership advantages of firms ‘O’, that is the monopolistic
advantage- locational advantage factors ‘L’ “which
concentrates on where to produce” and by the internalization
factor ‘I’ that addresses the question of why firms engage in FDI
rather than license foreign firms to use their proprietary assets
(Dunning, 1993, cited in Okoli and Agu, 2015); hence it is often
called an OLI theory Adejumo (2013) recognized that each of
these sub paradigms lays the foundation for spillovers in the
host economy. This means that it must be more efficient for the
foreign investor to make use of the firm-specific technology
within the multinational concern through a subsidiary, rather
than licensing a foreign entity. This is because the desire to
internalize certain firm specific advantages presupposes the
presence of spillover possibilities. It follows that the technology
embedded in a foreign subsidiary cannot be completely
protected from trickling down to domestic firms. Hence, it is
this competitive advantage of the foreign firm that produce s
the expected spillover benefits to local firms in terms of
knowledge spillovers, technological spillovers, etc. Thus, the
Eclectic Paradigm of FDI will serve as the Theoretical framework
for this study.

2.3 EMPIRICAL REVIEW

A fairly large body of empirical literature that seeks to

explain the impact of Foreign Direct Investment (FDI) on the
Manufacturing Industry in Nigeria exists. These studies aim at
establishing the desirability or otherwise of this international
commercial or trade relationship. The outcomes of these
studies are quite varied. While some believe that FDI
contributes significantly to the development of manufacturing
capability in Nigeria, others hold contrary opinions. Some of
these studies are examined in some detail below. Opaluwa,
Ameh, Alabi and Abdul (2012), using Vector Auto Regression,
Co-integration and Error Correction Techniques, studied the
effect of Foreign Direct Investment (FDI) on the Nigerian
manufacturing sector between 1975 and 2008. They discovered
that FDI has negative effect on manufacturing productivity and
this is statistically significant. They recommended that
Government should create an enabling environment for foreign
investment and should also provide infrastructure to lower cost
of doing business. In the same vein, Adejumo (2013), in his
Foreign Direct Investments and Manufacturing Sector
Performance in Nigeria (1970- 2009), used Auto Regressive Lag
Distribution (ARLD) technique to examine the relationship
between FDI and the value added to the manufacturing
industry in Nigeria from 1970 to 2009. He used key variables
like FDI and manufacturing Value-added, to discover that FDI
Spillover has negative effects on manufacturing sub-sector in
Nigeria in the long run. He further contended that FDIs acted as
sales subsidiaries, rather than producing entities in Nigeria. He
recommended that government efforts should be geared
towards making FDI complement the production efforts of local
capacity in terms of skills, technical know-how and wages. The
study did not consider key variables like GDP which also affect
the activities of manufacturing sector in Nigeria. Eneji, Onyinye,
Kennedy and Rong (2012) carried out a study of trade and
investment between China and Nigeria with a focus on the
textile industry. Using a Vector Reg restive Model with Market
Equilibrium identity, the researchers found out that Nigeria is a
net loser in trading relationship with China. They recommended
that technological transfer and diffusion should be an
important component of our national Science Technology
policy. Anowor, et al. (2013) used Ordinary Least Squares (OLS)
method and Time Series Analysis from 1970 to 2011 to explore
whether any relationship exists between FDI and
manufacturing output in Nigeria. Their study found out that FDI
is statistically significant in explaining variations in
manufacturing output. To actualize maximum benefit from
FDIs, government should provide support for technological
capabilities of indigenous firms. Government should, in
addition, institute favorable conditions for knowledge
exchange. In research on Manufacturing Output and Foreign
Direct Investment in Nigeria using an Econometric analysis of
Ordinary Least Squares estimation technique carried out by
Orji, et al. (2015), they utilized key variables including
Manufacturing Output, FDI data, private sector credit, domestic
savings, exchange rate. As a result, they discovered that FDI
impacted negatively on the manufacturing sector and
recommended that Government should channel increased FDIs
into critical sectors that support necessary inputs and raw
materials for local production. During the same period, Okoli
and Agu (2015) used Econometric model of multiple regression
analysis to assess the impact of Foreign Direct Investment Flow
on manufacturing sector performance in Nigeria, utilizing key
variables like Manufacturing Value Added (MVA), FDI flows,
labor supply, etc. to test the relationship between dependent
and independent variables. They arrived at the position that
insufficient FDI impacts negatively on the operations of
manufacturing firms. A major weakness of this study was that it
did not account for macroeconomic factors and infrastructure
deficiency. Their recommendations were that attracting FDIs
should not be done in isolation. There should be improvement
in domestic investment and human capital skills. For the
fifteen-year period between 2000 and 2015, Okaro (2016)
carried out a study of Foreign Direct investment (FDI) Inflows
into the Real Sector of the Nigerian Economy. Using Correlation
and Regression Analyses aided by SPSS, he discovered that GDP
was positively correlated with FDI for the period, but did not
increase manufacturing output at a higher rate. He
recommended that government should improve infrastructure
and also liberalize foreign sector by removing barriers. Kanu,
Nwaimo, Onyechere and Obasi (2017) explored how Foreign
Direct Investments impacted Industrial Productivity in Nigeria
using Vector Author Regression Analysis. The outcome was that
industrial productivity was not FDI-drive. They recommended
that government should enact investor-friendly policies to
attract FDIs to the manufacturing sector. In the same vein,
Mounde (2017) used Augmented Dickey-Fuller Test and
Johansen Test to explore the Causal relationship between FDI
and Manufacturing Output in Nigeria. The study found out that
Causality runs from FDI to industrial production, both in the
short and long run. He recommended that Government should
adopt aggressive reforms to boost FDI. Danmola, Olateju &
Aminu (2017) carried out a study of the Impact of Foreign
Direct Investment on the Nigerian Manufacturing Sector using
Time Series Analysis. The study found out that FDI exerts a
positive influence on manufacturing output and the impact is
significant. He recommended that trade liberalization should be
implemented with caution so as not to make the economy
more import-dependent. In summary, based on the reviewed
empirical studies of the impact of FDI on the manufacturing
sector in Nigeria, there is as yet, no consensus on the findings.
There is thus need for further research in the area. Hence, the
rationale for this study.
 CHAPTER THREE
3.0 METHODOLOGY
3.1 INTRODUCTION

The main data utilized in this study is secondary data which

have been accumulated over time. The data are maintained
and monitored by the financial regulatory agencies of the
Federal Government of Nigeria. These data are reasonably
accurate and reliable bearing in mind the sources. To analyses
the inflow of FDI and the determinant variables, secondary data
from statistical bulletins of CBN were preferred because that
was the simplest and cheapest way of gathering the needed
information. It is expected that the data devoid of distortions
that may be experienced in attempting to collect primary data
directly. Also, intensive library research and the internet is used
to gather additional information. Inferential statistics is
employed to summaries and describe the data for better
understanding of the phenomena. Statistical/econometric
technique is used for analysis of the multiple regression
equation using Ordinary Linear Regression Estimates (OLS).

Model Specification
 Based on the foregoing, our model specification is adapted
from the approaches of Adejumo (2013), Offiong and Atsu
(2014), and Okoli and Agu (2015), expressed as (Equation 1);
MVA = f (FDI, RGDP, DI) .........................................(1)
where: MVA = Manufacturing sector value added output
FDI = Foreign Direct Investment Flows
RGDP = Real Gross Domestic Product.
DI = Domestic investment.
The paper assumed an approximately linear correlation
between the dependent variable and independent variables.
A simple linear least square is specified given the variables
under consideration thus:
MV! = â 0 + â1logFDI + â2RGDP + â3logDI + it ....................... (2)
where ì = the stochastic error term
From equation (2), Foreign Domestic Investment is
modelled as an independent variable to account for the turning
point of FDI intensity that is necessary and sufficient for
manufacturing firms to function in Nigeria in the long run. This
is due to the fact that empirical research in Nigeria supports the
fact that excessive Foreign Direct Investment may in fact cripple
the performance of manufacturing firms as well as their output
level. In the same vein, when Foreign Direct Investment (FDI)
flows is insufficient to affect the operations of manufacturing
firms in Nigeria, it may as well hamper its output and
performance level; thereby making the economy over
dependent on foreign sectors. Therefore, there is need to
estimate equation (2) and this will require the transformation
of variables like foreign direct investment, real gross domestic
product and domestic investment to their log forms. The
reason for this measure is to linearize the variables as well as
get them all integrated of same order since we are going to
adopt the Johansen test of co-integration in this work.
 CHAPTER FOUR
4.0 DATA PRESENTATION, ANALYSIS AND RESULTS
4.1 DATA PRESENTATION
As explained in methodology, the data sourced for this
study is secondary in nature. They were collected from official
sources such as the Central Bank of Nigeria (CBN), National
Bureau of Statistics (NBS), the International Monetary Fund
(IMF) and the World Bank. The scope of the data is from 1981
to 2015 as can be seen from Appendix I.
The data in Appendix I contains Manufacturing Values
Added (MVA) as proxy for manufacturing output and
performance, the Gross Domestic Product that shows trends in
national economic performance, Foreign Direct Investment that
reveals the Net Inflows of FDI over the stated period and
Overseas Development Assistance (ODA) as proxy for net
Domestic Investment in Nigeria. The results presented in this
Section are based on the tests stated in the previous Section.
All results analyzed in this section were obtained from e-views
12.5 software statistical package.
The trend analysis among the variables is revealed below in
4.1.1 Figure 1 below
Figure 1 Relationship Between the Variables

14000000000
CHART PRESENTATION OF DATA

12000000000

10000000000

8000000000

6000000000

4000000000

2000000000

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Man GDP Fdi

The above Figure 1 shows relationships among the variables. As

FDI increases and was relatively stable over time,
manufacturing output increases. Similarly, as GDP increases
and fluctuates, manufacturing output increases as well. The
increases in Domestic investment have just little changes in
manufacturing output.
4.1.2 Table 1: Unit Root Stationarity Result

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -6.903570 0.0000

Test critical values: 1% level -3.653730
5% level -2.957110
10% level -2.617434

Augmented Dickey-Fuller test statistic -6.123490 0.0000

Test critical values: 1% level -3.646342
5% level -2.954021
10% level -2.615817

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -6.658482 0.0000

Test critical values: 1% level -3.646342
5% level -2.954021
10% level -2.615817

Augmented Dickey-Fuller test statistic -6.124478 0.0000

Test critical values: 1% level -3.653730
5% level -2.957110
10% level -2.617434

Source: Authors' Computation, 2023

The critical values for rejection of hypothesis of unit root

were from MacKinnon (2023) as reported in e-views. The four
variables (GDP, FDI, MVA and DI) underwent unit root test
using the Augmented Dickey-Fuller (ADF) test. All variables
were found to be non-stationary at level but stationary at
different orders of integration. GDP was stationary after second
difference i.e. integrated of order two, I(2); while the remaining
were stationary after first difference i.e. integrated of order
one, I(1). From Table 1, GDP was stationary after second
difference. The absolute ADF calculated value of GDP (-
6.123490) is greater than the absolute ADF critical values at the
1 per cent, 5 per cent, and 10 per cent level of significance after
second difference.
On the other hand, MVA, FDI and DI became stationary
after first difference with the inclusion of trend in the equation.
The absolute ADF calculated value of MVA, FDI and DI (-
6.123490, -6.578018 and - 6.018060) are greater than the ADF
critical values at the 1 per cent, 5 per cent, and 10 per cent
levels of significance. This implies that the data can be used for
regression analysis.
4.1.3Table 2: Johansen’s Cointegration Result
Date: 03/25/23 Time: 16:14
Sample (adjusted): 1983 2015
Included observations: 33 after adjustments
Trend assumption: Linear deterministic trend
Series: FDI GDP MAN ODA
Lags interval (in first differences): 1 to 1

Unrestricted Cointegration Rank Test (Trace)

Hypothesized Trace 0.05

No. of CE(s) Eigenvalue Statistic Critical Value Prob.**

None * 0.697225 73.50181 47.85613 0.0000

At most 1 * 0.491882 34.07452 29.79707 0.0151
At most 2 0.237020 11.73217 15.49471 0.1702
At most 3 0.081484 2.804881 3.841465 0.0940

Trace test indicates 2 cointegrating eqn(s) at the 0.05 level

* denotes rejection of the hypothesis at the 0.05 level
**MacKinnon-Haug-Michelis (1999) p-values

Source: Authors' Computation, 2023

 From Table 2, the first two equations show the
cointegrated equations with their likelihood ratios (73.50181
and 34.07452) greater than the 5 per cent critical values
(47.85613 and 29.79707). On the basis of this result, the
variables are cointegrated. The implication of cointegrated
variables is that the variables considered have long run
relationship i.e., they all move in the same direction in the long
run. The decision of cointegration implies that the result, which
will be obtained from the general regression, is not spurious
and is fit for use in analysis.

4.1.4Table 3 General Regression Result

Dependent Variable: Log (MVA)
Dependent Variable: LMAN
Method: Least Squares
Date: 03/25/23 Time: 15:56
Sample: 1981 2015
Included observations: 35

Variable Coefficient Std. Error t-Statistic Prob.

C 3.563765 1.587792 2.244478 0.0321

LFDI -0.373293 0.153699 -2.428728 0.0211
LGDP 0.929382 0.318307 2.919770 0.0065
LODA -0.174020 0.102507 -1.697636 0.0996

R-squared 0.398232 Mean dependent var 1.712999

Adjusted R-squared 0.339996 S.D. dependent var 0.463198
S.E. of regression 0.376305 Akaike info criterion 0.990378
Sum squared resid 4.389771 Schwarz criterion 1.168132
Log likelihood -13.33161 Hannan-Quinn criter. 1.051738
F-statistic 6.838287 Durbin-Watson stat 0.669320
Prob(F-statistic) 0.001142

Source: Authors' Computation, 2023

4.2 DATA ANALYSIS
The result shows that a percentage increase in FDI on the
average will result in a 0.373293 decrease in MVA holding other
independent variables constant. A percentage increase in GDP
on the average will cause a 0.929382 increase in MVA holding
other variables constant.
A percentage increase in DI on the average will cause a
0.174020 decrease in MVA holding other variables constant.
The coefficient of determination (R2) of 0.398232 means that
40% of the total change in MVA in Nigeria was accounted for by
the explanatory variables of the models. The R2 shows that
model has poor fit at 40%, indicating that there is need for
more explanatory variables to be included in the model. The T-
statistics is used to measure the individual significance of the
parameters.

4.2.1 Table 4.4: Statistical Significance of the Parameters

Variable T cal T tab Pvalue Status
FDI -2.428728 2.12 0.0211 Significant
 GDP 2.919770 2.12 0.0065 Significant
DI -1.697636 2.12 0.0996 Insignificant
Source: Authors' Computation, 2023

From t-distribution table, applying the two-tailed test at 5

per cent level of significance and 31 degree of freedom (n-k=
35-4 = 31), the critical (tabulated) t value is 2.021.
Hence T cal > T tab (significant) but T cal < T tab (T cal > T
tab). This implies that FDI and GDP are statistically significant
while DI is statistical insignificant. Hence Tcal > Ttab
(significant).

4.2.2 TEST OF HYPOTHESIS

The F- statistics is used to test overall significant of the
parameters, the test is conducted at 5 per cent level of
significance and 31 degrees of freedom (V1= K-1 = 4-1 = 3, V2 =
n-k= 35-4 = 31), the critical (tabulated) t value is 2.021 F tab = 2.
92
Fcal = 6.838287 Hence Fcal > Ftab This implies that FDI had
significant impact on the manufacturing output over the period
investigated.
 CHAPTER FIVE
5.0 FINDING, CONCLUSION AND RECOMMENDATION
5.1 FINDING AND DISCUSSIONS
From the estimation, the results showed that foreign
direct investment has negative significant impact on
manufacturing output in Nigeria; this means increases in FDI
will not yield positive result or impact on manufacturing output
in Nigeria. In related development, domestic investment
through foreign aid has negative impact on manufacturing but
insignificant. The study was in line with Opaluwa, Ameh, Alabi
and Abdul (2012) who discovered that FDI has negative effect
on manufacturing productivity and this is statistically
significant. Moreover, Adejumo (2013) and Orji, et al. (2015),
found out that FDI impacted negatively on the manufacturing
sector. In contrary to this study was the work of Kanu, et al.
(2017) and Danmola, et al. (2017) that revealed positive impact
of Foreign Direct Investment on the Nigerian Manufacturing
Sector.
 However, increases in the performance of the economy
(GDP) will have direct and significant impact in manufacturing
sector in Nigeria. This implies that as growth and development
is achieved or attained in an economy; there is going to be
positive significant impact on manufacturing sector in Nigeria.
The state of any economy plays a crucial role in performance of
manufacturing sector. The result was in agreement with Okaro
(2016) who discovered that GDP was positively correlated with
FDI in Nigeria.

5.2. CONCLUSION
This study examined the impact of Foreign Direct Investment
on the Manufacturing Sector in Nigeria. In doing this, the paper
appreciated the need to bridge the identified financing
resource gap needed to enhance productive capacity in Nigeria.
This is because the literature is yet to reach an agreement on
the role of FDI on economic development, and by extension
manufacturing growth in Nigeria. The study discovered that in
as much as significant work has been carried out on the role of
FDI in economic development of Nigeria, much empirical
research has not been done specifically on the its role in the
manufacturing sector. This is crucial because the manufacturing
sector represents the growth engine in developing nations and
Nigeria must not be an exception.
The study concluded that that foreign direct investment
has negative significant impact on manufacturing output in
Nigeria and net domestic investment through foreign aid has
negative impact on manufacturing output but insignificant.
However, increases in the performance of the economy (GDP)
will have direct and significant impact in manufacturing sector
in Nigeria.
5.3. RECOMMENDATIONS
The study has shown that while FDI is important in the
development of the manufacturing sector in Nigeria, it was
discovered that it did not enhance manufacturing output in the
study period. In fact, FDI led to decline in Manufacturing Value
Added (MVA) in Nigeria. To improve the situation, a number of
policy areas needs to be properly managed and addressed. The
study considers the following to be very critical.
i. That government should ensure channeling FDI into priority
areas and maintain proper evaluation and monitoring of FDI to
prevent observed abuse and unwholesome practices.
ii. Government should institute a body to be known as the
National Agency for the Monitoring and Evaluation of Foreign
Investment in Nigeria (NAMEFIN). This should be staffed by
competent professionals whose main aim will be to identify and
manage database and performance of FDI initiatives and net
foreign aid received in Nigeria and advise government
appropriately.
iii. Since GDP has positive and significant impact on
manufacturing output in Nigeria, government should as a
matter of urgency create enabling environment for investors
through massive infrastructural developmental projects that
will enhance productive capacity of manufacturing sector in
Nigeria.