Foreign Direct Investment (FDI) and Employment Nexus in Nigeria: An Empirical Evidence (1990-2023)

This study examined the effect of foreign direct investment (FDI) on employment in Nigeria,alongside other macroeconomic variables, including real GDP (RGDP), inflation rate (INF), andreal effective exchange rate (REER), using annual time series data from 1990 to 2023. Johansenco-integration test was employed to observe both short-term and long-term effects. In the presenceof two cointegrated equations, the study employed VECM while Fully Modified Ordinary LeastSquare (FMOLS) was applied for robustness check. The findings show that FDI and RGDPpositively impact employment, emphasizing their importance for job creation, while REERdepreciation negatively affects employment. Inflation has no significant long-term effect onemployment. The VECM results align with these findings, confirming both short-term and long-term influences and adjustments over time. The study concludes that boosting FDI inflows,sustaining economic growth, and managing exchange rates are crucial for long-term employmentgrowth in Nigeria. It suggests policies to enhance the investment climate and suggests futureresearch on sector-specific impacts as well as the role of human capital in the FDI-employmentrelationship.