Responsiveness of Foreign Direct Investment to Governance Quality

The study analyzed the impact of government indicators on foreign direct investment inflow in Nigeria from 1999 to 2023. Variables such as regulatory quality, control of corruption, and government effectiveness capture government indicators, while the net inflow of FDI is used to capture foreign direct investment. The study employed the autoregressive distributive lag (ARDL), since it allows for variables that are stationary at the level and at first difference. The unit root test confirmed that a few variables were stationary at the level, while all variables were stationary at first difference. Also, the ARDL bound cointegration result confirmed that a long-run equilibrium relationship exists between government indicators and foreign direct investment. Furthermore, empirical findings revealed that all the government indicators, such as regulatory quality, control of corruption, and government effectiveness, assert a negative influence on foreign direct investment. Based on this, the study suggests that the government should improve the quality of the country's institutions and ensure a vigorous anti-corruption campaign, more accountability and freedom of expression, strengthen regulatory authority, and improved government efficacy through better leadership selection processes.