The Impact of Foreign Investment on Nigerias Economy - Dissertation Example

Nigeria is the most heavily populated country on the African continent. It is one of the rapidly developing economies in Africa along with South Africa. Moreover, Nigeria is blessed with immense oil and other natural resources. However, technological advancements in Nigeria are not so good. As a result that, it is incapable of exploiting natural resources properly. Being the most rapidly emerging economies in the world, India and China can help Nigeria immensely in streamlining its economic growth.

Plenty of Indian and Chinese companies are currently operating in Nigeria in different sectors such as agriculture, oil, mining, refining, automobile manufacturing, banking, retailing, etc. These countries are helping Nigeria to exploit its natural resources judiciously. This paper analyses the impact of foreign investment (with reference to China and India) on Nigeria’s economy and how Nigeria as a developing nation can promote Foreign Direct Investment (FDI). Table of Contents 1.0 Introduction Globalization is a process through which the activities done in one part of the world affects people in other parts of the world (Reich 1998: 5).

According to Lieber and Weisberg, globalization helps people all over the world in the creation of a stronger and stable world (Lieber and Weisberg 2002: 274). Huge changes are taking place in this world after the introduction of globalization and liberalization. Some of the underdeveloped economies such as India, and China are currently emerging as the most rapidly developing economies in the world, mainly because of their ability to exploit the opportunities provided by globalization. These countries were successful mainly because of their readiness to open up their domestic market for foreign direct investments.

The importance of free market and private enterprise in promoting economic globalization was explained by many scholars (Ghai1997: 1) The economy of the world keeps improving and keeps becoming more integrated as most countries want to play/contribute to a role in the economy of the 21st century. Globalization keeps increasing as countries try to identify their competitive advantages and use their available resources to secure profits for themselves. Trade has now been expanded compared to the past, services and cross-border flows of financial resources and people.

Countries all over the world have realized that domestic resources alone may not help them much in streamlining economic growth. As a result of the majority of the countries have already opened up their economies and liberalized the rules and regulations to attract more and more foreign direct investments or FDI. FDI is the investment of foreign capital in domestic goods and services. According to Dicken (2007, p.36), direct investment is a kind of investment intended to gain control over the activities of another firm.

FDI is the investment across nations. “The flow of FDI and portfolio investments across countries generates a very large amount of investment incomes going in the opposite direction” Letto-Giles 2002: 27). On the other hand, Adina (2011) mentioned the training effect of FDI. In her opinion, FDI may help a country to modernize techniques and technologies, increase production and supply of goods, improve quality and competitiveness, create new jobs and grow the quality of life (Adina 2011: 148).