Frank O. Ozoh et. al., International Journal of Research in Management, Economics and Commerce, ISSN 2250-057X, Impact Factor: 6.384, Volume 06 Issue 10, October 2016, Page 29-39 www.indusedu.org Page 29 The Influence of Investments on Economic Growth: The Case of Nigeria Frank O. Ozoh 1 , Ikechukwu D. Nwaka 2 , Christiana. O. Igberi 3 , and Kalu. E. Uma 4 1,3,4 (Department of Economics and Development Studies, Federal University, Ndufu-Alike, Ikwo, Ebonyi State, Nigeria) 2 (Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus, via Mersin 10, Turkey) Abstract: The study dwells on the effect of domestic investment, foreign direct investment and economic openness on the economic growth of Nigeria from 1970-2012. The approach of vector error correction model was adopted after some descriptive statistics, series of tests of the time series property and diagnostic tests. The study found amongst others the insignificant effect of the domestic investment in promoting growth at the period of study. The response of the foreign direct investment on growth was not satisfactory and was envisaged to be due to Nigeria is dominantly agrarian economy with insufficient technology and weak manufacturing sector needed to enhance sophisticated foreign production. Openness result seems inconclusive and unsatisfactory but further analysis depicted desirable effect in the long-run of its operation. Consequently, among the policy implications made were: fiscal and monetary incentives should intensively be pursued to encourage and stimulate domestic investments in small, medium and large scale industries especially in the rural areas dominantly occupied by the large proportion of the populace; acceleration of technological innovation needed by foreign investors and institutional reforms, elimination of double taxation, high import tariffs in some sectors of the economy should be avoided. Keywords: Economic, growth, investment, openness. Jel Classification: E22, O40, F43 I. INTRODUCTION Nigeria is really an oil rich nation but the leadership over the years could not diversify the economy. So, the country relied heavily on the proceeds from oil as a major source of financing the social, economic and political activities. However, the myopic perception of the political power holders or the resource managers impeded effective use of realised income for investment which culminates to the ugly experience and low living standard of today (Index Mundi, 2014 and CIA World Fact-Book, 2013). Deficiency of public investment in infrastructure and the snail speed implementation of reforms constitute the major key debility to growth and advancement. Actually, countries engage in varieties of activities aimed at accelerating economic development and growth. Public investment is usually employed as a veritable engine of development and growth. This is because improvement in the living standard of the people depends on efforts geared toward increasing aggregate economic activities which involves enough investment, effective and efficient utilisation of the resources of the society and increase in aggregate productivity. Investment is the intentional increase in the stock of capital. In the view of Keynesians, investment depends on income. In Nigeria, low income has played unqualified role in inability to raise sufficient capital for investment. So, lack of and improper utilisation of available capital has contributed adverse influence in investment in capital overheads, developmental infrastructure and other productive ventures. Besides, the skewed investment in the urban with little or nothing in the rural areas dominantly occupied by Nigerians has large negative effects. Consequently, the acceleration of economic growth is seriously damnified. Economic growth as conceived by Abiola and Egbuwalo (2010) is the ability of a country to expand her production possibility curve to rise above its previously operating level. In addition, growth is perceived to imply a sustained rise in real per capita income of a nation. It can specifically be stated that economic growth involves a long term rise in the capacity of a given nation to continuously supply various economic goods to her populace such that the citizenry has sufficiency for consumption. But suffice it to note that economic development is synonymous to growth. Meier (1980) posits that economic development is the process whereby the real per capita income of a country increases over a long period of time-subject to the stipulations that the number of people below an “absolute poverty line” does not increase, and that the distribution of income does not become more unequal. This implies improvement of lives of the people beyond what it was in the past, and what can specifically guarantee this noble