Foreign Direct Investment, Capital Flows, and Sectoral Growth in Nigeria: A Comparative Analysis of Agriculture and Manufacturing

Anthony Orji; Jovita Nneka Uwakwe; Onyinye Imelda Anthony-Orji; Jonathan Emenike Ogbuabor; Juliana Ngozi  Obiorah

doi:10.36923/ie-frontiers.v28i2.404

Open Access Article Economics Macroeconomics

Anthony Orji ⁽¹⁾ , Jovita Nneka Uwakwe ⁽²⁾ , Onyinye Imelda Anthony-Orji ⁽³⁾ , Jonathan Emenike Ogbuabor ⁽⁴⁾ , Juliana Ngozi Obiorah ⁽⁵⁾

1. Department of Economics, University of Nigeria, Nsukka, Enugu State, Nigeria

2. Department of Economics, University of Nigeria, Nsukka, Enugu State, Nigeria

3. Department of Economics, University of Nigeria, Nsukka, Enugu State, Nigeria

4. Department of Economics, University of Nigeria, Nsukka, Enugu State, Nigeria

5. Department of Economics, University of Nigeria, Nsukka, Enugu State, Nigeria

https://doi.org/10.36923/ie-frontiers.v28i2.404

Issue
Vol. 28 No. 2 (2025)

Submitted
August 28, 2025

Accepted
September 16, 2025

Published
September 23, 2025

Keywords:

Foreign Direct Investment , Capital Flows, Agricultural Sector, Manufacturing Sector, Economic Growth, ARDL Model

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Abstract

The nexus between the agricultural sector, manufacturing sector, and FDI has been a topic of debate over the years. While the fundamental role of FDI in the growth of the overall economy has been widely recognized, findings of existing literature have remained unclear and inconclusive on how the impact of FDI varies across these distinct sectors, especially within the context of developing countries like Nigeria. This study aims to provide a comprehensive comparative analysis of the impact of FDI and other capital inflows on Nigeria’s agricultural and manufacturing sectors between 1980 and 2021. Using annual time-series data from the World Bank’s World Development Indicators (WDI) and the Central Bank of Nigeria (CBN), the study employs the Autoregressive Distributed Lag (ARDL) modelling approach. Four sector-specific ARDL models were specified, each subjected to extensive diagnostic and robustness checks to ensure the reliability of the estimates. The findings reveal a contrasting effect: while FDI exerts no statistically significant influence on manufacturing output, it has a strong and transformative impact on agricultural performance. In addition, other capital inflows, including official development assistance, development finance, and remittances, were found to significantly influence both sectors. The study concludes that FDI is not a universal driver of growth, and its effectiveness depends on sectoral characteristics, investment type, and policy environment. It contributes to the literature by offering one of the first sector-specific comparative analyses of capital flows in Nigeria, providing evidence to guide policies aimed at shifting the economy from consumption-driven patterns toward sustainable, production-oriented growth.

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Authors

Anthony Orji

https://orcid.org/0000-0003-4032-7051

anthony.orji@unn.edu.ng (Primary Contact)

Jovita Nneka Uwakwe

https://orcid.org/0009-0006-6750-0175

Onyinye Imelda Anthony-Orji

https://orcid.org/0000-0002-0603-7264

Jonathan Emenike Ogbuabor

https://orcid.org/0000-0002-0162-0303

Juliana Ngozi Obiorah

https://orcid.org/0000-0002-6876-6374

Author Biographies

Anthony Orji

Dr. Anthony Orji is a PhD holder in Economics and a Lecturer in the Department of Economics, University of Nigeria, Nsukka. He is a fellow of the Nigerian Young Academy. He is also an Alumnus and Fellow of the African Program on Rethinking Development Economics (APORDE), Johannesburg, South Africa; A Fellow of International Economic Issues and Development Policy, New Delhi, India; a Fellow of the African Science Leadership Programme, South Africa, and a former Visiting Scholar to the University of Laval, Quebec, Canada. He has published widely and attended several national and international conferences. He is a member of many research organisations and has participated in several research projects funded by the following institutions: World Bank, Partnership for Economic Policy (PEP), African Economic Research Consortium (AERC), and others. His teaching and research interests are in development economics, capital flows, agriculture, macroeconomics, monetary economics, gender issues, finance, and resource mobilization.

Jovita Nneka Uwakwe

Uwakwe Jovita Nneka is an Economist and a researcher. She is an alumnus of the Department of Economics, University of Nigeria, Nsukka. Her research interests are in the areas of Capital Flows, Development Economics, Monetary Economics, Finance, and Resource Mobilization.

Onyinye Imelda Anthony-Orji

Dr. Onyinye Anthony-Orji is a Ph.D holder in Economics and a lecturer in the Department of Economics, University of Nigeria, Nsukka. She has published widely in local and international journals, and her research interests are in the areas of Development Economics, Monetary Economics, Finance, and Resource Mobilization.

Jonathan Emenike Ogbuabor

Dr. Jonathan Ogbuabor is a renowned scholar, lecturer, and researcher. He earned his master's degree from the University of York in the United Kingdom and his Ph.D. in Economics from the Department of Economics at the University of Nigeria, Nsukka. He also serves as a lecturer in the Department of Economics at the University of Nigeria, Nsukka. He is a member of several professional organizations, including the Nigerian Economic Society (NES) and the Institute of Chartered Accountants of Nigeria (ICAN), among others. He has attended numerous national and international conferences and publishes widely. His teaching and research interests include Development Economics, Climate Change, Agriculture, Energy Economics, Monetary Economics, and Applied Econometrics.

Juliana Ngozi Obiorah

Dr. Juliana Ngozi Obiorah is a Ph.D holder in Social Science Education with a special interest in international macroeconomics. She is also a lecturer in the Department of Social Science Education, University of Nigeria, Nsukka. She has published widely in local and international journals and attended many conferences.

Orji, A., Uwakwe, J. N., Anthony-Orji, O. I., Ogbuabor, J. E., & Obiorah, J. N. . (2025). Foreign Direct Investment, Capital Flows, and Sectoral Growth in Nigeria: A Comparative Analysis of Agriculture and Manufacturing. Innovation Economics Frontiers, 28(2), 1-13. https://doi.org/10.36923/ie-frontiers.v28i2.404

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