Capital inflows, manufacturing exports and economic growth in Nigeria: A threshold regression analysis

Abstract

The study examined the optimal level of capital inflows for manufacturing exports and economic growth in Nigeria. Annual data from 1981-2017 on foreign direct investment (FDI), foreign portfolio investment (FPI), cross border borrowing CBB (components of capital inflows), financial sector development (FSD), real gross domestic product (RGDP) and manufacturing exports (MEX) were sourced from various issues of the Central Bank of Nigeria (CBN) Statistical Bulletin while data on gross capital formation (GCF) and human capital (HC) were sourced from World Bank Development Indicator (WDI) database. Data collected were analyzed using threshold regression econometric techniques. The results from the optimal level showed that capital inflows (CINF) threshold value of (25.55%) with coefficient of (9.94) annually is the optimal point of capital inflows for Nigeria and the threshold point for manufacturing exports indicates no capital inflows (CINF) threshold value for manufacturing exports in Nigeria. This study concludes that the optimal point of capital inflows for economic growth is 25.55%; any threshold level above this sustainable level, economic growth will be affected negatively in Nigeria but no capital inflows threshold point exist for manufacturing exports and therefore recommends that excessive capital inflows should be avoided in the country so that it does not make administration and management of monetary policy difficult, while the needed capital inflows should be well monitored and channeled into sectors (like manufacturing, agriculture, mining and quarrying etc...) that have absorptive capacity for them.

Does financial sector development have a sustainable level of effects on inclusive growth in Sub-Saharan African countries? Evidence from dynamic panel threshold analysis

“…As a result, this concept becomes critical in this study because it is all about improving the general level of investment, productive economy, and education. Inclusive growth is a multifaceted idea of economic growth that is at the center of policy debates around the world because it provides more information about the growth of an economy than ordinary GDP (Asian Development Bank Strategy, 2020;Clarke, Xu, & Fou, 2017;IMF, 2016b;Joseph, Olayiwola, & Yinusa, 2019;Kiani & Ullah, 2015;Munir & Ullah, 2018;Olayiwola, 2022;Olayiwola & Akinbobola, 2022;Olayiwola & Joseph, 2020;Olayiwola, Okunade, & Fatai, 2021). Figure 6 illustrates the level of inclusive growth index in selected SSA countries.…”