The Impact of National Security on Foreign Direct Investment in Nigeria: An Empirical Analysis

Abstract

Kidnappings, killings, and corruption seem to be the political cum economic trinity bedeviling Nigeria today. The current state of insecurity and bombings especially in the Northern part of Nigeria has posed serious challenges to the peace and stability of Nigeria macroeconomic environment. The Nation has not only suffered colossal loss in terms of infrastructure, properties and viable human lives but also economic sabotage which leads to the displacement of foreign direct investment. Given the key role which foreign direct investment plays in most developing economies especially as a catalyst for economic growth, it was therefore imperative to examine the relationship between FDI and National security. Thus, this paper investigates the impact of National security on foreign direct investment covering the period of 1980 to 2009 employing Least Squares technique. Defense and Security Vote (DSV) was used as a proxy for National security. The findings reveal a negative nexus between FDI and National security. It was recommended that strong policy stance most be taken to address the state of insecurity in Nigeria (and other developing countries) so as to attract more foreign direct investment essential for economic growth and development.

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