Effects of foreign direct investment in telecommunications sector on economic growth in Nigeria (1985-2015)

Abstract

The study examined the Effects of Foreign Direct Investment in Telecommunications Sector on Economic Growth in Nigeria. It also examined the trends of FDI inflow to the telecom sector in Nigeria, evaluate the trends of the overall share of telecom sector in Nigeria Gross Domestic Product, the differences between FDI in the telecom sector in Nigeria before and within Global System for Mobile communication period, determine the impact of FDI inflow in telecom sector on economic growth and the relationship between the share of telecom sector in total Gross Domestic Product. Data was obtained from Central Bank Statistical Bulletin and National Bureau of Statistics for the period of 1985-2015.Time series analysis was done on the data collected with the aid of E-views version 9.0. Test of hypotheses were done with Augmented Dickey Fuller (ADF) and Phillips-Perron (PP) was used to determine whether or not the data was stationary. The Johansen Co-integration test was then used to test for co-integration. Additionally, paired T-Test was used to analyse the differences between Foreign Direct Investment in Nigeria between 1985 to 1999 (pre –GSM era) and 2001 to 2015 (GSM era). Based on the findings of this study, the empirical results of Foreign Direct Investment in telecommunication sector has no significant effect on contribution of telecom to GDP in Nigeria with co-efficient of 0.15988; P- 0-043; F-statistics 7.011, Adjusted R-square value 0.720 and Durbin Watson 2.189 respectively. The relationship between contributions of the telecom sector to economic growth was positive and insignificant with the co-efficient of GDPtel (0.0327; 0.071). The study has helped to achieve the objective that introduction of Foreign Direct Investment in telecommunication sector revealed positive result of 0.14687 and statistically insignificant at 5%.