ABSTRACT

The study examined the impact of foreign direct investment on manufacturing sector performance in Nigeria, between the period 1999 and 2015. The descriptive research design based on the use of time series data was adopted. The data utilized consists of annual observations on growth (GDP), Manufacturing sector output and other important indicator like total factor productivity (TFP), trade openness (TO) and rate of interest (INT) on Foreign Direct Investment between. Using the Autoregressive-Distributed Lag (ARDL) Model, the study shows that there is long-run relationship between Foreign Direct Investment and manufacturing sector performance in Nigeria. The study established that the impact of foreign direct investment on the manufacturing sector performance in Nigeria is sub-optimal. From the analysis it is evident that foreign direct investment has not been effectively directed to the manufacturing sub-sector in Nigeria. This insignificant relationship between foreign direct investment and manufacturing sector performance could be as a result of fact that most foreign direct investment has concentrate in order areas of the Nigerian economy such as the petroleum sub-sector. Based on the findings and conclusion drawn thereof, the following recommendations are made: Formulation of an explicit manufacturing sector development policy based on principles of comparative advantage or disadvantage. Key infrastructure such as power should be provided to manufacturing sector to reduce the over head cost of most manufacturing firms in Nigeria, Macro-economic policies of the government needs to be address the problem of inadequate investment in the manufacturing sector amongst others.