Foreign Direct Investment, Trade Openness and Economic Performance in Nigeria: Does Governance Quality Matter?

Abstract

The present study attempts to explore whether governance quality matters in the dynamic linkage between foreign direct investment, trade openness, and economic growth in the case of Nigeria. This study interacts foreign direct investment and trade openness with governance quality. The study shows that foreign direct investment interaction with governance quality failed to have a contagion effect on economic growth. Also, the trade-governance quality interaction demonstrates a deleterious effect on economic growth. Based on the signs and statistical significance, the study concludes that governance quality matters to the attraction of foreign direct investment and trade facilitation. Therefore, for Nigeria to attract significant capital inflows and trade flow, there is an urgent need to put in place necessary regulatory laws.