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https://doi.org/10.32728/ric.2017.31/2

DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN NIGERIA: A MARKOV REGIME-SWITCHING APPROACH

Akinlo A. Enisan orcid id orcid.org/0000-0002-3013-0186 ; Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria


Puni tekst: engleski pdf 401 Kb

str. 21-48

preuzimanja: 3.200

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Sažetak

Several studies have analyzed the movement of foreign direct investment in Nigeria using linear approach. In contrast with all existing studies in Nigeria, this paper runs several non linear FDI equations where the main determinants of FDI are determined using Markov- Regime Switching Model (MSMs). The approach enables us to observe structural changes, where exist, in FDI equations through time. Asides, where FDI regression equation is truly nonlinear, MSMs fit data better than the linear models. The paper adopts maximum likelihood methodology of Markov-Regime Model (MSM) to identify possible structural changes in level and/or trends and possible changes in parameters of independent variables through the transition probabilities. The results show that FDI process in Nigeria is governed by two different regimes and a shift from one regime to another regime depends on transition probabilities. The results show that the main determinants of FDI are GDP growth, macro instability,
financial development, exchange rate, inflation and discount rate. This implies liberalization that stems inflation and enhance the value of domestic currency will attract more FDI into the country.

Ključne riječi

FDI; Markov-Regime Switching Model; Nigeria

Hrčak ID:

181074

URI

https://hrcak.srce.hr/181074

Datum izdavanja:

28.4.2017.

Posjeta: 4.248 *