DETERMINANTS OF INVESTMENT IN THE NIGERIAN ECONOMY

ABSTRACT

The purpose of this study is to examine the determinants of investment in the Nigerian economy by making use of time series data for the period, 1970-2015. The study employed the auto-regressive distributed lag (ARDL) for the analysis. From the result, it is shown that exchange rate, interest rate, inflation rate, and total financial saving, all have a positive effect on investment whereas external debt has a negative effect on investment. Therefore, the Government should improve these determining factors of investment in order to increase gross domestic investment in Nigeria. The policy implications of these findings call for the harmonization of interest rate policy, exchange rate, financial savings, and inflation rate. This will help in maintaining a stable macroeconomic environment, the development of financial reforms to stimulate investment and capital accumulation.