FOREIGN FINANCIAL INFLOWS AND UNEMPLOYMENT IN NIGERIA: EVIDENCE FROM TIME-SERIES COINTEGRATION ANALYSIS (1987–2024)
Keywords:
Foreign Direct Investment, Foreign Portfolio Investment, Nigeria, Official Development Assistance, Official Remittances Inflow, UnemploymentAbstract
This study analyzed the relationship between foreign financial inflows and unemployment in Nigeria from 1987 to 2024 using time-series cointegration methods. The Autoregressive Distributed Lag (ARDL) approach, preceded by Augmented Dickey-Fuller (ADF) unit root and Johansen cointegration tests, was applied to data on foreign direct investment (FDI), foreign portfolio investment (FPI), official development assistance (ODA), and remittances, while controlling for inflation and exchange rates. Long-run results indicated that FPI and remittances significantly reduced unemployment, whereas ODA increased it; FDI, inflation, and the exchange rate exhibited insignificant long-run effects. Short-run estimates confirmed a significant unemployment-reducing effect for FPI and inflation. The study's specific empirical contribution is its integrated long-run analysis, which distinguishes the heterogeneous effects of four distinct inflow categories within a unified framework, offering nuanced evidence for Nigeria's employment policy.
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