IMPACT OF INFLATION, FOREIGN DIRECT INVESTMENT AND UNEMPLOYMENT ON GROSS DOMESTIC PRODUCT IN NIGERIA
Abstract
The study delves into the impact of inflation, Foreign Direct Investment (FDI), and unemployment on Nigeria's Gross Domestic Product (GDP). Utilizing time series datasets from the World Bank spanning from 2000 to 2022, it employs statistical methodologies such as the Augmented Dickey-Fuller (ADF) and Philips–Perron (PP) tests to gauge stationarity, while the Johansen co-integration test is employed to discern potential long-term relationships among the variables. The results of the ADF and PP tests indicate a presence of a unit root at the level, suggesting non-stationarity, yet the variables exhibit stationarity at the first difference. However, the co-integration analysis reveals no discernible long-run relationship among inflation, FDI, unemployment, and GDP during the study period. These findings underscore the need for the Nigerian government to adopt effective policies aimed at mitigating inflation and unemployment. Given the absence of long-term relationships among these economic indicators, the efficacy of short-term policies to address immediate economic challenges is emphasized.
Keywords
GDP, Inflation, FDI, Unemployment, Co-Integration, Stationarity