The Analysis of the Relationship between Telecommunication, Foreign Direct Investment and Economic Growth in Nigeria: 1980 - 2017

Abstract

The study examines the nexus between Telecommunications, Foreign Direct Investment and its impact on economic growth in Nigeria from 1980 – 2016 using augmented Cobb Douglas production function specification. Secondary data were sourced from the World Bank, international telecommunication union, and central bank of Nigeria. The variables that were tested are gross domestic product per capita, manufacturing output, the ratio of government to private sector expenditure in the telecommunication sector, foreign direct investment, consumer price index and employment. The result indicates that teledensity is statistically significant at 5%; foreign direct investment is statistically significant at 10%; and consumer price index is statistically significant at 10% which exhibit a negative influence on economic growth. In conclusion, there is the need for more emphasis on improving local content in terms of electronics design, fabrication, mass production of mobile phones, telecom equipment to enhance human capacity development. This is to further deepen the impact of telecommunication and over time reverse the negative influence. Since the sector is heavily private sector driven under public sector regulation, the study suggests that better trade policy reforms should be implemented skewed towards aggressive local content drive.