This thesis examines why, despite increased Foreign Direct Investment (FDI) in Nigeria's economy, there has not been a substantial spillover of growth outcomes to the rest of the economy. While Nigeria has experienced higher GDP growth, it remains marked by limited export diversification, low labor productivity, and rising poverty, suggesting that FDI has not been instrumental in transforming its economy. This research paper argues that GDP alone is not a good indicator of FDI's impact on Nigeria's economy and instead uses other development indicators to assess FDI's effectiveness. Focusing on the sectoral allocation of FDI, I conducted a comparative study of economic trends in Nigeria and Malaysia, as both countries have experienced a surge in FDI inflows over the years. Using similar sectors, including manufacturing, mining, services, and agriculture, I examined sectoral outcomes, such as value added to GDP, employment levels, and other broader growth indicators. This study shows that heavy FDI concentration in the extractive sector, in the case of Nigeria, oil, tends to be less productive than investment in a more integrated, productive sector like manufacturing. Although the shift in FDI allocation has been from the extractive sector to the service sector, it still contributes to the broader discussion of whether changes in FDI sectoral allocation are sufficient to produce a broad structural transformation. By engaging with these shifts in sectoral allocation, this thesis contributes to studies of economic growth and development in developing and resource-dependent economies. This research uses time-series data from the World Bank, Nigeria's Bureau of Statistics, and Malaysia's Department of Statistics to examine FDI allocation in both countries over time and its impact on broader economic indicators.
Omolola Akinfisoye (Fri,) studied this question.