91 Journal of Accounting, Business and Finance Research ISSN: 2521-3830 Vol. 2, No. 2, pp. 91-97 DOI: 10.20448/2002.22.91.97 Assessment of the Development and Growth of Nigerian Economy as a Function of FDI Flows Joseph Oluseye Mokuolu 1 1 Department of Banking and Finance, Ekiti State University, Ado-Ekiti, Nigeria Abstract An attempt is made to postulate a model based on the assumption that the inflow of Foreign Direct Investment (FDI) affect the growth of Nigerian economy. A simple econometric modeling approach was applied to time series annual Nigerian data for a period covering forty eight years. The result revealed that there exist a strong positive relationship between FDI flows and economic growth represented by the Gross Domestic Product (GDP). The implication of this is that the inflows of FDI reasonably affect the level of growth of the economy with the level of correlation and the positive sign between the two variables. The study concluded that FDI is germane to the economic development of a developing country and on the basis of the findings it is recommended that a positive step should be taken to encourage indigenous companies to understudy and learn the process and strategies of the MNCs. Keywords: FDI GDP Economic growth Economic development. JEL Classification: F43, O10 Licensed: This work is licensed under a Creative Commons Attribution 4.0 License. Publisher: Scientific Publishing Institute 1. Introduction Economic growth and development has always remained an ultimate concern to both the government and the citizenry, the quest which has made the pursuant and attraction of Foreign Direct Investment (FDI) to a nation a paramount task. This is as a result of its perceived implication on the people and the country in taking its rightful position in the global circle. Adegbite and Ayadi (2010) in their study corroborated that FDI assist in filling the domestic revenue generation gap in a developing economy and thereby been able to generate sufficient fund to meet their expenditure needs. To this extent the government and the people often strive to employ the right policy that will not only ensure stability but also enhances the growth of the economy. To achieve improved living condition the nation must work very hard to generate sufficient income to ameliorate the per capital income of its citizenry and as well as set apart some of the income for future use. This objective can only be achieved through investment and given the low level of capital formation in less developed countries thus one of the ways of doing this is to rely primarily on foreign direct investment as a source of external finance to stimulate their economy. However, the process of globalization marked by a rapid increase in the internationalization of production is a subject of intense interest to scholars in several academic fields. While most economists view the issue of foreign capital as a blessing for LDC, many sociologists and political scientist consider it as a curse seeing it as a manifestation of an exploitative capitalist world system (Amin 1990; Bornchier and Chase-Dunn 1985; Frank 1969; Wallerstein 1974) It is an ongoing debate that FDI is superior to other types of capital inflows in stimulating economic growth of a nation for several reasons. FDI is expected to be less volatile and offer not just capital but an avenue to get involved in modern technology and know how. This view is strongly supported and embraced by every regime in Nigeria government which has been pursuing policies to attract FDI in other to initiate economic recovery after a prolonged period of recession and micro economic instability. However as laudable as this move is, empirical evidence supporting this policy advice is surprisingly hard to come by Nunnenkamp and Spatz (2004). The debate between Firebaugh (1996) and Dixon and Boswell (1996) on the influence of foreign investment on economic growth tend to heat up this topic. It is in the light of this imbroglio that this work seeks to know the relationship between Foreign Investment and the economy of Nigeria. Specifically the work attempt to examine the direction of relationship and the effect FDI has on the economic growth and development of Nigeria. 2. Review of Literature In the bid to attract foreign direct investment, countries especially the developing countries employ different policy measures to boost their economies through FDI attraction with the thinking that export of capital by the Multinational