Globalization and Economic Growth in Nigeria: Analyzing the Roles of FDI Inflows, Trade Liberalization, and External Borrowing in Nigeria
Year: 2026
Type: article
Abstract: This study examines the impact of globalization on Nigeria’s economic growth, focusing specifically on the roles of Foreign Direct Investment (FDI), Trade Openness (TO), and External Debt (EXTD) from 1990 to 2023. Using the Autoregressive Distributed Lag (ARDL) Error Correction Model, the empirical findings reveal the existence of a stable long-run relationship among the variables, reinforced by a highly significant error-correction term indicating a rapid adjustment to long-run equilibrium. The short-run results show that FDI and external debt exert immediate positive effects on GDP growth, while trade openness exhibits a negative short-run influence, suggesting transitional adjustment pressures. Conversely, the long-run estimates reveal that sustained FDI inflows are associated with reduced economic growth, possibly due to weak spillovers, sectoral concentration, and absorptive capacity constraints. External debt demonstrates a positive and significant longrun effect, indicating that borrowing has supported long-term investment and growth within manageable thresholds. Trade openness maintains a negative and insignificant long-run effect, implying that Nigeria has not fully leveraged trade integration for growth enhancement. The study concludes that Nigeria’s growth response to globalization is mixed, shaped by structural rigidities, institutional quality, and the composition of external inflows. Policy recommendations focus on improving FDI quality, strengthening trade competitiveness, and enhancing debt management frameworks.
Author: Clement Ikuba Alegu
Institution: Bingham University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W7204236824