Foreign Direct Investments and Employment Generation Nexus in Nigeria

Abstract

This paper examines the relationship between foreign direct investment and employment generation in Nigeria using multiple linear regression model for data which covers the period from 2002 to 2012. To empirically establish the relationship, some variables are incorporated into the econometric model which include Employment level (100 – published unemployment level for the year review) as the dependent variable while the explanatory variables are FDI (percentage of nominal value of FDI in Nbn), GDP (annual GDP growth rate) and the nominal interest rate. From the empirical results, FDI exhibit negative relationship with the level of employment in Nigeria while GDP, interest rate are positively related with the level of employment but non of the explanatory variables significantly impact on the level of employment in Nigeria within the period of the study. Also the value of R2 and R2 as well as F-statistics reveals that all variables in the model do not significantly impact on the level of employment in Nigeria. The negative relationship of FDI with employment level calls for critical examination because if FDI has been established by many findings of researchers to have positive impact on GDP, it is expected that it should equally bring about reduction in the level of unemployment. At this, the paper recommends amongst others that government should put mechanism whereby the research institutions go in partnership with major industries in the country to develop skills that are adaptable in the contemporary job market and government should ensure that the needed infrastructural facilities are provided to attract more investors.

DOI: 10.5901/jesr.2014.v4n5p119