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FOREIGN PORTFOLIO INVESTMENT ON ECONOMIC GROWTH OF NIGERIA: AN IMPACT ANALYSIS
Abstract: This study explored the impact of foreign portfolio investment on economic growth in Nigeria from 1986 to 2017. The motivation for this study is driven by the new attention being given to the drive for foreign capital especially in developing economies in an attempt to stimulate economic growth. The study employed Augmented Dickey-Fuller (ADF) test, The Johansen cointegration technique and the Error Correction Mechanism (ECM) in the analysis. The variables employed include: Net foreign portfolio investment, real Gross Domestic Product (GDP), inflation rate, market capitalization and trade openness. The result revealed that foreign portfolio investments have positive significant impact on economic growth in Nigeria. It is therefore, recommended that government should initiate policies that will promote the long-rum growth of the capital market and the economy at large, the government must create a conducive business environment by providing constant power supply, good roads, security of life and property and maintains policy consistency in order to boost local investment in the country, the capital market should be further deepened through the introduction derivatives.
Keywords: Net foreign portfolio investment, real GDP, inflation rate, market capitalization, trade openness