E-ISSN 2039-2117 ISSN 2039-9340 Mediterranean Journal of Social Sciences MCSER Publishing, Rome-Italy Vol 5 No 2 January 2014 713 Foreign Direct Investments and Economic Development and Growth in Nigeria Godly Otto Department of Economics Faculty of Social Sciences University of Port Harcourt godlyotto@yahoo.com Wilfred I Ukpere Department of Industrial Psychology & People Management, Faculty of Management, University of Johannesburg, South Africa Correspondence author’s E-mail: wilfredisiomaukpere@gmail.com Doi:10.5901/mjss.2014.v5n2p713 Abstract Developing economies are characterized by high rates of poverty, unemployment, inadequate capital, low or obsolete technology, and information gaps amongst many others. To mitigate these problems, many developing countries seek foreign direct investments. This is because such investments are believed to facilitate capital inflow, technology transfer, information flows into the host economies and thereby increase total output. Some developing countries exemplify these benefits. However, experience in many developing countries show that these expectations have not been met. In some of these countries, foreign direct investments as multinational companies have actually undermined host economies. This work examined the praxis in Nigeria over a – 41 – year period and observed that there is a positive relationship between Foreign direct investments and economic growth in Nigeria. Policies are required which will facilitate foreign direct investments into Nigerian economy especially in the non-oil sector. Keywords: Foreign Direct Investments, Economic Growth, Exchange Rate 1. Background Nigeria is blessed with abundance of natural and human resources. It is estimated that the country (which is commonly referred to as Giant of Africa) has about 61 mineral resources, each of which has the capacity to sustain the economy (Ejeogu, 2011). Unfortunately, these resources are largely lying latent and the economy is mono-culturally dependent on petroleum for its survival. Over 90 per cent of Nigeria’s foreign receipts are accounted for by oil and because of volatility of oil prices, the economy suffers when there is a glut in the international oil market (Devlin and Titman 2004). Besides, because there is a tenuos nexus between the oil sector and the rest of the local economy, unemployment is high, poverty is prevalence and security is a current challenge (Okonjo-Iweala 2012, Olugbile 2012). A key reason for this situation is inadequate capital and technical knowhow necessary to tap from the abundant unemployed resources (Roberts and Tybout 1997). The need for technological advancement is imperative in Nigeria. The country is in dire need to expand its output, improve its resource use (employment), enhance social welfare and limit its overdependence on oil exports (Adetayo, 2012). This has informed the search for strategies that will generate economic growth. One such strategy is the Foreign Direct Investments. Foreign direct investments (FDI) are believed to be key source of productivity expansion because they have capacity for technology transfer. FDI can also increase access to foreign markets and in concert with local resources can increase competitiveness of products because of cheap labour in host countries. In point, Foreign direct investments could generate economic growth in host Countries. However, how well has this been done in Nigeria? This article investigates the relationship between Foreign Direct Investments and Economic Growth in Nigeria. Conceptual Framework According to Todaro and Smith (2003), foreign direct investments (FDI) define overseas investments by private multinational corporations. In other words, foreign direct Investments are multinational investments overseas. This link