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The Determinants and Impact of Inward Oil and Gas FDI in Nigeria By The Determinants and Impact of Inward oil and gas FDI in Nigeria By Mayor N. Ari A thesis submitted in partial fulfilment of the requirements of the University of Wolverhampton for the degree of Doctor of Philosophy September 2020 I declare that this thesis, in its entirety, my own work, and that it has not previously been presented in whole or part, for any other award, or published in whole or in part elsewhere (unless otherwise indicated). Save for any express acknowledgements, references and/or bibliographies cited in the work; I confirm that the intellectual content of the work is the result of my own efforts and of no other person. The right of Mayor N. Ari to be identified as the author of this work is asserted in accordance with ss.77 and 78 of the Copyright, Designs and Patents Act 1988. At this date, copyright is owned by the author. Signature……Mayor N. Ari…….. Date…………6/05/2021…..…...…… 1 Abstract Endowed with enormous natural resources but with a volatile economy, this study seeks to conduct an empirical analysis investigating the determinants and impact of inward oil and gas FDI on Nigeria’s economic growth and export performance. The study dataset covers a period of 17 years from 2001 to 2017. The country-level dataset was analysed in three separate models, which include, the country as a whole, OECD group and non-OECD group using dynamic panel data analysis techniques proposed by Blundell and Bond (1998) known in methodology literature as sys-GMM (system Generalized-Method-of-Moment). The study’s empirical evidence provides statistical support that inward oil and gas FDI in Nigeria is determined by market-seeking (proxied by GDP per capita), resource-seeking (proxied by fuel export) and efficiency-seeking (proxied by labour force). As a whole, it is seen that OECD countries’ FDI is more attracted by market-seeking and efficiency-seeking determinants, while, non-OECD countries are more attracted by resource-seeking factors. The study also found that inward oil and gas FDI in Nigeria has a significant positive effect on economic growth (proxied by GDP per capita). However, the study shows that OECD countries oil and gas FDI impact on Nigeria’s economic growth is higher compared to non-OECD countries oil and gas FDI. As regards export performance, the empirical results showed that inward oil and gas FDI in Nigeria has a significant positive effect on export performance in Nigeria (proxied by oil and gas exports). Also, from the empirical results, it is observed that the impact of non-OECD countries’ oil and gas FDI is higher compared to OECD countries oil and gas FDI impact on Nigeria’s foreign export. The empirical results corroborate the complementarity hypothesis of FDI and trade nexus by providing empirical evidence using oil and gas FDI in Nigeria. The main theoretical contributions of this study stem from the empirical evidence on inward oil and gas FDI examining the heterogeneity of the investing MNEs and, showing how this heterogeneity of investing MNEs impact on Nigeria’s economic growth and export performance. The study also provides valid evidence for FDI promotion agencies in Nigeria on how best to harness the benefits of inward oil and gas FDI in a volatile economy for greater economic and export performance. 2 Table of Content Abstract ................................................................................................................................................... 1 Table of Content ..................................................................................................................................... 3 List of Table ............................................................................................................................................. 6 List of Figure ............................................................................................................................................ 7 Acknowledgements ................................................................................................................................. 8 Acronyms ................................................................................................................................................ 9 1.0 Introduction ............................................................................................................................. 10 1.1 Background of the Study ..................................................................................................... 10 1.2 Rationale of the Study/Research Gap ................................................................................. 13 1.3 Research Outline and Methods ........................................................................................... 16 1.4 Thesis Structure ................................................................................................................... 18 2.0 Chapter Two: FDI Trends in Nigeria ................................................................................................ 20 2.1 Introduction ................................................................................................................................ 20 2.2 Overview of FDI Trends in Nigeria .............................................................................................. 20 2.3 Oil and Gas FDI into Nigeria ........................................................................................................ 25 2.4 Nigeria Economic Landscape ...................................................................................................... 27 2.5 Studies on Mono-product Economy and Economic Growth in Nigeria ...................................... 30 2.6 Dutch Disease Syndrome: A Case of Nigeria ............................................................................... 47 2.7 Chapter Summary ....................................................................................................................... 49 3.0 Chapter Three: Literature Review on the Determinants of FDI in the Nigerian Oil and Gas Sector 51 3.1 Introduction ......................................................................................................................... 51 3.2 Theories of Foreign Direct Investment ................................................................................ 52 3.2.1 Theories of Developed Markets MNEs ................................................................................ 52 3.2.2 Theories of Emerging Market MNEs .................................................................................... 70 3.3 Review of Empirical Studies of Factorial Determinants of FDI ............................................ 85 3.4 Theoretical Framework and Hypothesis Development ....................................................... 97 3.5 Chapter Summary .............................................................................................................. 104 4.0 Chapter Four: Literature Review on the Impact of Oil and Gas FDI on Nigeria’s Economic Growth 105 4.1 Introduction ....................................................................................................................... 105 4.2 Definition of Operational Terms ........................................................................................ 106 3 4.3 Theoretical Background and Hypotheses .......................................................................... 109 4.4 Chapter Summary .............................................................................................................. 136 5.0 Chapter Five: Literature Review on the Impact of Oil and Gas FDI on Nigeria’s Export performance ....................................................................................................................................... 137 5.1 Introduction ....................................................................................................................... 137 5.2 Definition of Key Operational Terms ................................................................................. 139 5.3 Theories of Foreign Trade .................................................................................................. 140 5.4 Complementarity and Substitutability of FDI-Trade Nexus............................................... 148 5.5 Theoretical Background and Hypothesis Development .................................................... 153 5.6 Chapter Summary .............................................................................................................. 163 6.0 Chapter Six: Methodology ..................................................................................................... 165 6.1 Introduction ....................................................................................................................... 165 6.2 Research Philosophy .......................................................................................................... 165 6.3 Research Approach ............................................................................................................ 169 6.4 Research Methods ............................................................................................................. 171 6.5.0 The Chosen Research Approach, Methodology and Methods .............................................. 172 6.5.1 The Study Sample .......................................................................................................... 173 6.5.2 Data Analytical Techniques ..........................................................................................
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