CAPITAL INFLOWS AND NIGERIA’S TRANSFORMATIONAL RECOVERY
- Chidiogo J. Okpala
- Ebikabowei Biedomo Aduku
- Ebele S. Nwokoye
- Uche C. Nwogwugwu
- ( paper pages. 69 - 94 )
Abstract
This
study examines the relationship between capital inflows and transformational
recovery in Nigeria from 1992 to 2021 under the production frontier framework. Transformational
recovery linked with economic diversification is more effective when an economy
exhibits resilience. Capital inflows on their part are necessary for providing
additional funds needed to carry out economic activities that will ensure
transformational recovery of the economy. Transformational recovery was
measured by manufacturing productivity efficiency, and economic
diversification. Capital inflows were measured by net bilateral aid inflows, debt inflows, foreign
direct investment (FDI) and remittances.
The Autoregressive Distributed Lag (ARDL) technique was employed in analysing
the data. The empirical result showed a negative and significant impact of net bilateral aid inflows on
manufacturing productivity inefficiency – a significant increase in efficiency,
and a positive and insignificant impact on economic diversification in the long
run. In the short run, net bilateral aid inflows had a negative and
insignificant impact on manufacturing productivity
inefficiency and a positive and significant impact on economic diversification.
It was also found that debt inflows had a positive and significant impact on
manufacturing productivity inefficiency – a significant decrease in efficiency,
and a positive and significant impact on economic diversification in the long
run. Also FDI had a negative and insignificant impact on manufacturing
productivity inefficiency and economic diversification in the long run. Other
findings showed that the working population had a negative and significant
impact on manufacturing productivity inefficiency and a positive and
significant impact on economic diversification both in the long and short runs.
Credit to the private sector and domestic investment had a negative and
significant impact on manufacturing productivity inefficiency and a positive
and significant impact on economic diversification both in the long and short
runs. The study therefore suggests, based on the findings that the conditions
for foreign capital inflows, especially official capital inflows, can be structured
in line with the economic transformational recovery plans of the country and
implementation should be strictly based on the plan. There should be a national
savings scheme for remittance inflows such that a certain percentage of every
inflow would be compulsorily. The study therefore concludes that capital inflows can significantly influence sustainable recovery in
both immediate and extended time frames. These capital inflows can promote
sustainable recovery by enhancing manufacturing efficiency, promoting economic
diversity, and improving productivity.
Citation
Chidiogo J. Okpala, Ebikabowei Biedomo Aduku, Ebele S. Nwokoye, Uche C. Nwogwugwu.
2024.
"CAPITAL INFLOWS AND NIGERIA’S TRANSFORMATIONAL RECOVERY"
The Nigerian Journal of Economic and Social Studies,
66 (1): 69 - 94.
JEL Classification
C11, F21, F30, O30, O47
