THE IMPACT OF DIRECT FOREIGN INVESTMENT ON THE NIGERIA ECONOMY A CASE STUDY OF JOHN-HOLT INVESTMENT COMPANY LOKOJA
THE IMPACT OF DIRECT FOREIGN INVESTMENT ON THE NIGERIA ECONOMY
(A CASE STUDY OF JOHN-HOLT INVESTMENT COMPANY LOKOJA)
BY
YAKUBU HARUNA
2009/HND/BUS/130
A PROJECT SUBMITTED TO THE DEPARTMENT OF BUSINESS ADMINISTRATION SCHOOL OF MANAGEMENT STUDIES, KOGI STATE POLYTECHNIC, LOKOJA.
IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF HIGHER NATIONAL DIPLOMA (HND) IN BUSINESS ADMINISTRATION
NOVEMBER, 2011
APPROVAL PAGE
This is to certify that this project has been for meeting the requirement for the award of Higher National Diploma (HND) in the Department of Business Administration, Kogi State polytechnic, lokoja.
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Mr. A. A. Oguche Date
Head of Department
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Mr. Sani . I Date
Project Supervisor
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External Examiner Date
DEDICATION
This project work is dedicated to Almighty God, who is the author and the finisher of my faith, the beginning and the end.
ACKNOWLEDGEMENT
“Except the lord build the house, they labour in vain those building it”. It is neither by my power nor by my strength. The struggle has been tough and the road rough, but a glorious journey at last by the special grace of Almighty Allah.
In undertaking this project work I have inevitably become indebted to my parent Late Mr. Mustapha Yakubu and my caring mother Mrs. Afusat Mustapha and also to my Honorable supervisor Mr. Sanni I. Who through his excellent knowledge thoroughly supervised the manuscript of this project work. I therefore express my sincere and unflinching thanks to him. More Greece to your elbow, Allah will reward him mightily.
I am also indebted my unflinching thanks to my lovely fiancΓ© Ahjia Kofoworola Wulemat Alasinrin for her support may God continue to bless her (Amen).
Conclusively, my sincere appreciation also goes to these cordial friends of mine for their moral, and professional advices as well as their financial assistance, such as Sunday Shadow, Simon shadow, prince Jimoh Owosuyi, Denis Parishe, Sk2Go, and other may Almighty Allah continue to see you through in all your endeavour in life (Amen).
ABSTRACT
Chapter of this project deals with the general overview of the impact of direct foreign investment company lokoja Kogi state. The researcher appraisals in the foreign investment, background of the study, objectives, problems, prospect and implementation, consequently, the researcher delved into the roles of direct foreign investment in the economic development of the country. Conclusively, opinion was sampled out that the foreign trade, John Holt company lokoja particular in Kogi state is fast becoming a global village and competitions is becoming strong and move pronounced day in day out.
TABLE OF CONTENT
Title page - - - - - - - - - i
Approval page - - - - - - - - - ii
Dedication - - - - - - - - - - iii
Acknowledgement - - - - - - - - - iv
Abstract - - - - - - - - - - v
Table of Content - - - - - - - - - vi
CHAPTER ONE (INTRODUCTION)
1.1. Introduction - - - - - - - - 1
1.2. Background of the Study - - - - - - - 1
1.3. Statement of the Problem - - - - - - - 3
1.4. Purpose of the Study - - - - - - - 4
1.5. Significance of the Study - - - - - - - 5
1.6. Research Hypothesis - - - - - - - 5
1.7. Scope of the Study - - - - - - - - 5
1.8. Limitation and Constraints of the Study - - - - - 5
1.9. Definition of Terms - - - - - - - - 6
CHAPTER TWO REVIEW OF RELATED LITERATURE
2.1. Theory of Investment - - - - - - - 8
2.2. Dependency Theory of Underdevelopment - - - - 9
2.3. Foreign Investment - - - - - - - - 10
2.4. Direct Foreign Investment - - - - - - - 12
2.5. Merit of Foreign Investment - - - - - - 14
2.6. Demerit of Direct Foreign Investment - - - - - 15
2.7. Economic Growth in Nigeria - - - - - - 17
2.8. Foreign Capital and Aid in Nigeria’s Economic Growth - - 18
2.9. Macro-Economic Policies and Enabling Environment for Direct
Foreign Investment in Nigeria - - - - - - 20
2.10 Deregulation of Financial System - - - - - 21
2.11 Promotion of Direct Foreign Investment in Nigeria’s for Economic
Growth. - - - - - - - - - - 23
2.12 The Impact of Direct Foreign Investment Growth From 1980 to Date - 25
CHAPTER THREE RESEARCH METHODOLOGY
3.1 Design of the Study - - - - - - - - 31
3.2 Area of the Study - - - - - - - - 31
3.3 Population of the Study - - - - - - - 31
3.4 Sample of the Study - - - - - - - - 32
3.5 Administration and Retrieval of Instrument - - - - 32
3.6 Problem of Methodology - - - - - - - 32
3.7 Method of Data Analysis - - - - - - - 33
CHAPTER FOUR (DATA PRESENTATION AND ANALYSIS)
4.1 Data Presentation and Analysis - - - - - - - 34
4.2 Test of Hypothesis - - - - - - - - 40
43 Discussion of Findings - - - - - - - 43
CHAPTER FIVE (SUMMARY CONCLUSION AND RECOMMENDATION)
5.1 Summary of findings - - - - - - - - 44
5.2 Conclusions - - - - - - - - - 44
5.3 Recommendation - - - - - - - - 45
Bibliography
Appendix
CHAPTER ONE
1.1. INTRODUCTION
Direct foreign investment (DFI) is one of the veritable tools usually applied by multinational corporations (MNCs) to explore opportunities in host countries such opportunities as attracting new sources of demand, enter market in which superior profits are possible, also fully benefit from economies of scale, utilize foreign materials, use foreign technologies, react to trade restrictions and many more.
Direct foreign investment carries managerial control. That is to say, MNCs brings their plants to the host countries to produce their products and they have control over their branches. DFI became possible because trade barriers were removed in South American countries, Europe and Africa.
DFI, whether by joint venture with foreign firms or through acquisition of foreign firm and formation of new foreign subsidiaries it requires a substantial investment and can therefore place much capital at risk. Moreover, when the investment does not perform as well as expected, the MNC may be unable to easily sell the foreign project created.
Given this return and risk characteristic of DFI, the researcher intend to examine the impact of direct foreign investment on the Nigeria economy. Using John Holt investment company lokoja branch as a case study.
1.2. BACKGROUND OF THE STUDY
Direct foreign investment can be regarded as the key to development. Foreign trade in Nigeria was at the hire hold of independence, economic activity before independence was almost wholly commercial, since the role of the colonies was that of produces of raw materials and consumers of finished foreign trade investment naturally. Therefore the early effort of foreign trade investment were to foster the substitution of locally produced goods for imported ones such that the case of this research work (John Holt Company) was not undermined.
This import substitution foreign investment strategy was a dominant feature of the Nigeria efforts; it has since then be programmed to include the production of some intermediate goods. The foreign trade investment policy and objective of the Nigerian government emphasized that the direction of action in its foreign investment sector shall be to encourage and promote directly and indirectly the rapid development of manufacturing and allied economic prosperity of the nation. This will also create positive input into the attainment of vital social goods.
It is not an over statement to say that (John Holt company) has contributed to the achievement of the direct-foreign investment policy objectives as it has been to achieve an accelerated pale of foreign development by making the foreign investment sector the prime mover of the economic. The objective conceived by the Government could only be achieved by taking into consideration many factors which were topmost in the list. The economic factors that have affected economic development and growth in Nigeria can be segregated into internal and external data beat to the oil boom of the 1970s when crude petroleum export began to gain as condense in foreign exchange earning and as the main source of government revenue. The oil sector which accounted for 22% of the Gross Domestic product provided about 80% government revenue and over 96% of export earning in 1980 as the result of increase of the government revenue form oil agriculture was neglected. The share of the agricultural sector in Gross Domestic product fall from 40% in the early 1970s to 20% in 1980s. Nigeria become dependent on imported food and agro-allied inputs. The need for foreign capital earning then arose in the country for economic development and growth foreign capital can enter a country in the form of private foreign capital many take the form of direct and indirect investment.
According to Simon (1996), Direct foreign investment means that the concern of the investing country exercise the factor or dejure control over the assets created in the capital importing country by means of the investment. The impact of the direct foreign Investment on the Nigeria economic via John Holt company may take many forms such as:
(i)The formation in the capital importing country of a company of the investing country.
(ii) The formation in the capital importing country of a company financial exclusively by the present concern situated in the investing country.
(iii) The formation of a concern in which a company of the investing country has majority holding.
(iv) Setting up a corporation in the investment Country for the specific purpose of operating in the other concerns.
(v) The creation of fixed asset in the country by the national of the investing country, such companies or concerns are known as transactional corporation or multinational corporations.
The researcher actually went to examine properly the nature objective and effects of direct foreign investment in the economic growth of Nigeria. This will enable the researcher to make capital into our economic through direct foreign investment. There are among other challenging factor about direct foreign investment on economic growth of the country.
1.3. STATEMENT OF PROBLEMS
In any company regardless of the type and size, the need for the contribution of direct foreign investment cannot be over emphasized in order to create a lasting impact to the effectiveness and requisite skill by those involve in the company.
However, it requires both Manual, conceptual and social skills which can be learnt on order to cope with various problem in the company.
John Holt Company Lokoja, Kogi State has the responsibility of providing higher quality of service to the development of Kogi State for the company to function effectively, the company should adequately and persistently involve in training of staff in order to control effectively the development of Kogi State economy.
Despite the availability of both human and material resource for the contribution of company to the development in Kogi State yet their performance was not encouraging. Therefore, the researcher was geared to evaluate the causes of poor performance in order to recommend for improvement.
1.4. PURPOSE OF THESTUDY
The purpose of this project is to study the impact of direct foreign investment in Nigeria economic growth via John Holt Company generally. The following are the major objectives of this study
(a) .To examine the effects of direct foreign investment in economic growth of the area.
(b) To examine the types of direct foreign investment in the area.
(c) To create awareness of the performances of Nigeria economic growth.
(d) To make suggestions based on the research for improvement of foreign investment in the area.
1.5. SIGNIFICANCE OF THE STUDY
This research work, when completed will be of great importance to the students, business society, future researchers and Kogi State in general.
(i) The result, suggestion and recommendation will assist greatly in the management of business in our society and will avert its failure.
(ii) The project work is determined to present the true picture of the impact of direct foreign investment in Nigeria economic and provides reference point for future research work.
(iii) Readers of this work might find it useful in having to know more of the numerous facilities available for obtaining loans from both foreign and local financial institutions to finance their business.
(iv) Operators of the system will see from the work their shortcoming and of options to remedy their shortfalls.
(v) Those not aware of the various economic service rendered by foreign investment for the purpose of developing the sector might start to reap benefit of this research after reading it.
1.6. RESEARCH HYPOTHESIS
The following are the assumption people have made about the impacts of direct foreign investment in Nigeria’s economic growth since 1980 till date. The researcher through the data collected will definitely test the following hypothesis in order to accept or reject them, the hypothesis are as follows:
1. HO: Direct foreign investment has no significant impact in Nigeria’s economic growth.
HI: Direct foreign investment has significant impact in Nigeria’s economic growth
2. HO: Direct foreign investment has no international impact on Nigeria’s economic growth.
HI: Direct foreign investment has only international impact on Nigeria’s economic growth.
1.7. SCOPE OF STUDY
This project work will be limited to the impact of Direct foreign investment on the Nigeria economic in John Holt Investment company in Lokoja Kogi State.
1.8. LIMITATION OF THE STUDY
This study has some shortcomings which arose as a result of problems encountered by the researcher in the course of this work. The shortcoming of the study is referred to as limitation of the study; the limitations were due to external forces sources as follows:
(a) Limited funds: Financial constraint narrowed my visit to the company (John Hoit company Lokoja) as it supposed to be.
(b) Limited time: couple with my official schedule (Lecture time) this made it difficult for me to get enough time to gather enough facts.
(c) Poor co-operation or respondents: Respondent when contacted are not ready to provide relevant information required, this also posed a problem in carrying out the study.
1.9. DEFINITION OF TERMS
Some key terms used in this segment or the study are further explained for proper understanding, these include:
(1) Direct foreign investment (DFI). Means that the concerns or the investing country exercise the factor that control over the asset created in the capital importing country by means of that investment in the flow or capital, technology and enirepreneunal skills to the host economy where they are combined with local factors in the production of goods and or export market.
(2) Dependency: is a situation in which the economy of a certain country is conditional by the development and expansion of another economy to which the former is subjected. It also means to describe certain characterizes of the economy as a whole and is intended to trace certain process which are casually linked to its underdevelopment.
(3) Optimal Capital: it’s the function of expected profit it the aggregate profit in the economy and business profit are arising they may lead to the expansion of their continued increase in the future.
(4) Foreign aid: it’s the floes from the done country in the form of grants wants, technical assistance, contribution in kind e t c to the recipient country invoices real cost for former and provide real benefit to the later.
(5) Data: it’s the art of gathering data relating to the subject of a study.
(6) Population: Refers to all member of element of well defined group and it could be finite or infinite.
(7) Research: it’s a frame work or plan usually as a guide in the convection and analysis of data for a study it is also related to the general approach adopted in executing the study.
(8) Licensing: its obligates a firm to provide technology (copyrights, patents trade-marks, or trade names) in exchange for fees or some other specified benefit. For example, A&T and operate parts of India’s telephone system.
(9) Franchising: its obligators a firm of provide a specialized sales or service strategy, support assistance and possibly an initial investment in the franchise in exchange for periodic fees.
(10) PORTFOLIO INVESTMENT: This does not carry a managerial control, that is foreign nationals just invest in share/stock or debenture; there rewards are inform of retention of profit which contrive to grow for the owners over the years.
Portfolio investment move to areas where they can get high returns for their investment.
CHAPTER TWO
LITERATURE REVIEW
2.1 THE THEORY OF INVESTMENT
The profits theory regards profits in particular undistributed profit as a source of internal fund for financing investment, investment depends on profits and profits in turn, depend on income in this theory, profits relate to the level of current profits and of the recent past. If total income and total profits are high. The retained earning of firms are also high, and vice versa. Retained earnings are of great importance for small and large firm when the capital market in imperfect because it is cheaper to use them. Thus, if profits are high, the retained earning are also high. The cost of capital is low and the optimal capital is large. That is why firm prefer to re-invest their extra profits making investment instead of keeping them in bank in order to buy securities to give dividends to share holders. Contrariwise, when profits fall, they cut their investment projects. This is the liquidly version of the profits theory.
Another version in that the optimal capital stock is a function of expected profits. If the aggregate profits in the economic and business profits are arising, they may lead to the expectation of their continued increase in the future. This expected profits are some function of actual profits in the past.
Edward (1980:15) has developed the profits theory of investment in which total profits vary directly with the income level for each level of profits, there is an optimal stock. The optimal capital stock varies directly with level of profits. The interest rate and the level of profits, in turn, determine the optimal capital sock. For any particular level of profits, the higher the interest rate, the smaller will be the optimal capital stock and vice versa.
2.2 THE DEPENDENCY THEORY OF UNDER 29THDEVELOPMENT
The dependency theory start that the dependence of less developed countries (LDCS) on developed countries (DCS) is the main cause for the under development of the former. This theory of underdevelopment originated in the writings of a few lasting America economists whose translations began to appear in English in the mid 1960sand early 1970s.
The prominent among them are frank Sunkel, Furtado, Santos, Emmanuel and Amin. The explanation of dependency given by the various writers differs in degree only. Each tries to pinpoint and specify certain which have been responsible for the underdevelopment of LDCS by DCS. So there is a plurality of dependency views; different are accorded the concept of dependency, and different analyses are offered to explain underdevelopment as a result of the interplay between internal and external structures. As there are varieties of dependency, theory, the researcher with briefly discuss the views of the main writers in the form of certain characteristics.
According to the Dependency economists (1985) the whole world is divided between two stets of countries; DCS (developed countries) and LDCS (less developed countries). The former are in the centre (Westan Europe, and the United State) and the latter are in the periphery back word counties of Asia, Africa and Latin America) frank calls the DCS as metropolis and LDCS as satellite countries others call the former as nominal and the latter as dependent countries. There are unequal centre periphery relationships where by LDCS are dependent on DCS in trade investment, technology etc. this dependence result in underdevelopment of the periphery because the centre is dominated by the powerful capital countries that exploit the their benefit.
There is only one specific definition of dependency to be found in the literature of dependence. This is by DOS Santos (1970:17) According to him, dependency is “a situation in which the economy of the contain countries is conditioned by the development and expansion of another economy to which the former is subjected. A dependent relationships between two or more economies one “when some countries (the dominant ones) can expend and be self sustaining, while other countries (the dependent ones) can do this only as reflection of that expansion, which can have either a positive or negative on their immediate development”
But there is no unanimity among economists above the meaning of dependence because of differences among them about the relative role of various futures of dependence which have caused underdevelopment of LDCS. Sanjay lack (1975:18) point out in this context: “ one sometime, gets a circular manner” LDCS are poor because they are dependent, and any characteristics that they display signify dependence”
Thus, according to lack (1975:20) in the usage of the dependency school, dependence is meant to describe certain characterizations (economic as well as social and political) of the economy as a whole and is intended to trace certain processes which are casually to linked to its underdevelopment and which are expected to adversely affect its development in the future”.
2.3 FOREIGN INVESTMENT
MYRDAL (1970:20) wrote that “foreign capital can enter a country in the form of private foreign capital may take the form of direct and investment”,
The researcher agreed with the assertion that foreign capital enters any country through investments. The researcher was impressed in the manner the writer discussed different methods by which foreign investment are brought into a country.
The writer further discussed the meaning of direct foreign investment and indirect foreign investment means that:
“The concerns of the investing country exercise the fact or dejure control over the assets crated in the capital importing country by means of that investment. Direct foreign investment may take many forms.
a. The formation in the capital importing country of a subsidiary of a company of the investing country.
b. The formation of a concern in which a company of the investing country has a majority holding.
c. The formation in the capital importing country of a company excusive by the present concern situated in the investing country.
d. Setting up a corporation in the investing country for the specific purpose of operating in the other concerns.
e. The creation of fixed assets in the other country by the nationals of the investing country. Such companies or concerns are known as transnational corporations (TNCE) or multinational corporations (MNCS)” Incase of direct foreign investment better known as portfolio or guaranteed or renter investment consist
“Mainly or guaranteed by the government of the capital importing country, shares or debentures by the nationals of some other country such holding do not amount to a right to control the company. The shareholders are entitled to the dividend only. In recent years, multilateral indirect investment have been evolved. The nationals of a country purchase the bonds of the world bank floated for financing a particular project in some less development counties”
Public foreign capital may consist of:
a. Bilateral hard loans
b. Bilateral soft loans
c. Multilateral loans
d. Inter governmental grant”
The researcher is of the view that foreign and refers to public foreign capital on hard and soft terms in cash or kind and inter government grants the researcher in this study is much concerned with direct foreign investment and their impact in Nigerian economic growth. Under this last category are also included loans made available by the various agencies of the United Nations. Foreign aid refers to public foreign capital on hard and soft terms in cash or kind and intergovernmental grants.
BAVER.A. (1974:11) Writing on the role of foreign aid said.
Development than private foreign capital. The financial needs of less developed country are so great that private foreign investment can only partially solve the problem of financing”
The researcher accept that private foreign investment can only particularly solve the problem of financing in less developed counties because most of these financiers are profit motivate their owners. For one thing, it has nothing to do with social expenditure in such spheres as education, public health, medical programmed, technical training and research that contribute to welfare of the citizen generally in the country. Such schemes through indirectly contributing to economic efficiency and productivity of the economy in the long-run yield no direct retunes and could therefore be financed with the help of grant received from advance counties. Further, private foreign investment pre-supposes the existence of basic public services in less developed countries. But investment in them requires large sums and risks which private capital is unable to undertake. So investment and slow-yielding project can be possible only on the basis of foreign and moreover, unlike private foreign investment, aid can be used by the recipient country in accordance with its development programmers. Therefore, much cannot be expected of private foreign investment.
2.4. DIRECT FOREIGN INVESTMENT
According to Simon. U. (1996:22) Direct foreign investment is the extension of enterprise involves flow of capital, technology and entrepreneurial skill to the host economy where they are combined with local factors in the production of goods and or export markets”
Amadi (2002:22) defines direct foreign investment as the distinctive features of multinational enterprise (MWE). It is not simply on international transport of capital but rather the extension of enterprise from its home country.
According to Hendrink (2001:23) defines directs foreign investment by private forms in foreign countries, whereby the investors maintain some degree of direct control of the investment project. The rule of thumb used most often is the foreign firm at least 10% of the foreign project or enterprise.
Todaro (1999:24) defines direct foreign investment as overseas investment by private Multinational Corporation.
Also, Anyanwu (1997:24) says foreign investment could be direct or portfolio investment consist of investment by non citizen in the domestic economy. Direct foreign investment is direct if it entails investment in physical asset in host country by foreigners. Direct foreign investment is non-resident investment in the form of a take over capital investment in physical asset in the host country by the foreign investors.
According to Lipsey (1997:25) Director foreign investment in non-resident investment in the form of a take over capital investment in a domestic branch, plant, or subsidiary corporation in which the investor has voting control.
Also Direct foreign investment represents a variable of foreign exchange and technological. Transfer, especially to developing courtiers. Direct foreign investment is therefore a major component of the capital and financial account of the nation balance of payment (CBN annual report and statement of account 2001)
At the turn of the present century, direct foreign capital mostly flowed in the form of indirect investments from Europe to the underdeveloped counties. Such capital, as flowed to low income counties in the 1920s in the form of direct investments went mainly into production for export. Very little of ill went to manufacturing for the home market. But since the Second World War, over half the foreign investment has been direct. Direct foreign investment has been concentrated mainly in extraction of raw materials like iron, crude oil, manganese, bauxitic, copper, electric energy etc. only a small percentage has gone to manufacturing and distribution. Not antic the economy takes off that direct investment is made in manufacturing, that is why direct investment in manufacturing flow to those counties which are some what include strictly advanced and have large domestic market.
2.5. MERITS OF FOREIGN INVESTMENT
Direct foreign investment (DFI) possess advantages which are discussed as:
a) DFI not only private finance but also managerial, administration and technical personnel, new technology, researcher and innovations in product and techniques of production which are in short supply in less developed countries.
b) This may in turn, encourage local enterprise to must more itself in ancillary industries or in collaboration with foreign enterprise infect, foreign enterprises encourages Local enterprise in two ways.
i, Directly by fostering local enterprise will men money, material, importing training and experience to its personnel.
ii, Indirectly by creating demand for ancillary or subsidiary services (like transport and training agents) which are uneconomical for direct foreign enterprise to provide.
c) By bringing capital and foreign exchange direct foreign investment helps in falling the sayings gap and the foreign exchange gap in order to achieve the goal of national economic development in less developed countries.
d) It part of the profits from direct foreign investment is generally ploughed back into the expansion, modernization or development of elated industries.
e) Direct foreign investment add more value added to output in the recipient country than the return on capital from foreign investment. In this sense, the social returns are greater than the direct returns on foreign investment.
f) Direct foreign investment also being revenue to the government of an less developed countries when it takes profits of foreign firms or sets royalties from concession agreements.
g) Direct foreign investment help in raising producing and have the real wages of local labour, When foreign investment induced industrialization take place, the real wages of the newly employed workers are higher than the real wager of workers in the rural sector of the economy. If direct foreign investment is in export oriented industries. It leads to much higher social benefit than it is in import-substitution industries because the former have large back ward and forward linkage effects. And if export industries are labour intensive, they also provide large employment opportunities.
h) Direct foreign investment also place less burden on the balance of payments of an under developed country in the early stage of development. For the time lag between the starting of new business concerns and the reaping of profits of profits in large.
Moreover, profits are likely to be small in the earlier stage of production. Thus, the remittance of profit from direct investment bring less pressure on the balance of payment if direct foreign investment mainly flows into agriculture and executive industries which produce primary goods for export, it further helps in easing the balance of payments position of less developed countries. In the case of a developing country like Nigeria, direct foreign investment has a greater sanctuary effect on the balance of payments. Since to help in producing manufactured articles, not only for the domestic market but also for foreign markets.
(i) Lastly direct foreign investment flowing into developing country also encourages its entrepreneurs to must in other less developed counties. Firms in Nigeria have started in ECOWAS countries and other less developed countries while they are still borrowing from abroad.
2.6. DEMERIT DIRECT FOREIGN INVESTMENT
Direct foreign investment has certain disadvantage in the form of costs to the recipient country which fund to off set its benefits,
(a) The recipient country may be required to provide basic facilities like land, power and other public utilities, rebate in distributed profits, additional depreciation allowance, subsidized inputs etc. such facilities and concessions involve cost in absorbing an less developed countries resources that could be utilized elsewhere by the government.
(b) To attract direct foreign investment less developed countries have to provide sufficient facilities for transferring profits, dividends, interest and principal. If these payments lead to a net capital out flow, they create serious balance of payment difficulties. Thus, the indirect costs of debt serving balance of payment adjustments create serious foreign exchange crises, thereby, adversely affecting the national economy.
(c) No doubt, direct foreign investment increase investment employment income and saving less developed countries but it adversely affects income distribution when it competes with home investment. Capital and other resources may flow to foreign enterprises in preference to domestic enterprise. This may reduce profits in the letter, thereby discouraging local enterprise.
(d) Many foreign concerns in less developed countries, reserve and savior executive posts for their national and pay them very high salaries with may panics which are a huge train on the resources of the recipient country. At best, they train local nationals for lower and middle level posts having little in dependent decision making. Moreover, the loutish spending habits of foreign national have an undesirable demonstration effect on the nationals of less developed countries and create social tension.
(e) Direct foreign investment bring in highly capital intensive technologies which do not fit in the factor proportion of less developed countries. Offer obsolete and discolored machines and technique are imported which involve high social cost in terms of replacement after a few years.
(f) Direct foreign investment also involve cost in the form of a less of domestic autonomy when foreign firms interfere in policy market decisions of the government of an less developed countries which favors the foreign enterprises. Such interference is usually resorted to, by the multinational corporations.
2.7. ECONOMIC GROWTH IN NIGERIA
One of the most important objectives of macro economic policy in recent years has been the rapid economic growth of an economy. According to etal (1999:26) Defined Economic Growth: as “The process whereby the real percapital income of a country increase over a long period of time”
The researcher is of the opinion that economic growth is measured by the increase in the amount of goods and services produced in a country. A growing economy produces more goods and services in each successive time period. Thus growth occurs when an economy is productive acidity increases which in turn is used to product more goods and services. In its wider aspect. Economic growth implies raising the standard of living of the people and reducing inequalities of come deviation. All agreed that economic growth is a desirable goal for a country. But, there is no agreement over the magic number of the annual growth rate which an economy should attain.
Generally, the economist believe in the possibility of continual growth. This belief is based on the presumption that innovations tend to increase production technologies of both capital and labour overtime. But there is every Luke hood that an economy might not grow despite technological innovations production highs not crease further due to the lack of demand which may return the growth of the productive capacity of the economy. The economy may not grow further if there is no improvement in the quality of labour in keeping with the new technologies. Jhingan (1999) discussing economic growth in less developed countries wrote that
“Growth is not limited because resources are scarce in every economic. All factor have opportunity cost. To produce more of one particular product will mean reduction in that of the other new technologies lead to the replacement of old machines which become useless”.
The research completely with the writer and adds that labour affects growth. Workers are also displaced because they cannot befitted in the new technological set up immediately. Moreover, rapid growth lead to urbanization and industrialization with their adverse effects on the platen of living and environment. People have to live in squalor and slums. The environment become polluted, social tensions develop.
The writer further stated that:
“growth has other move basic effects on sure that unrestricted growth is worth all its cost, since the price in terms of change in deterioration of or even destruction of the environment is not get fully known. What does seem clear, however, is that growth is not going to be halted because of environment problem and that mankind must learn to cope with the problem or face the consequence”
The researcher relating all the above to Nigeria monetary and fiscal policies contribute towards growth by helping to maintain stability of privies. By moderating economic fluctuation and avoiding recession these policies help in achieving the growth objective. Since rapid and variable rate of inflation discourage investment and adversely affect growth these policies help in controlling inflation. And growth can be promote by a judicious mix of monetary fiscal policies. So monetary and fiscal policies should be such as to encourage investment and control economic fluctuation in order to promote growth.
2.8 FOREIGN CAPITAL AND AID IN NIGERIA’S ECONOMIC GROWTH.
Foreign aid which floes form the donor country in the form of grants, loans, technical assistance, contribution in kind etc to the recipient country involves real costs for the former and provides real benefits to the letter.
Pincus (1965:30) has measured the real costs of aid to the donor and real benefits to the recipient of aid. He measures the real cost of capital flows for capital exporter as the income he forgoes as a result of the out flow of capital, given alternative possible use of the same funds. The real benefits for a capital importer is measured by the net increment in income as a result of investing the capital inflow received, as compared with making the same investing the capital from alternative sources for measuring capital flows developed countries to a less developed countries princess introduces the concept of a grant equivalent. A grant is “a sort of gift from developed countries to a less developed countries on which the latter is not required to pay any interest or make repayment. A loan given by a developed country on terms such as lower interest rate longer grace period and linger repayment period has some confessional element as compared to a loan at commercial market terms”.
The researcher is of the opinion that the above write failed to differentiate properly between investment capital and aid from developed countries to less developed counties. Also, the writer method of presentation of foreign aid and grants was not quiet acceptable. Grant being freely given or a gift from developed country to less developed countries does not sound economical without implications. The fact is that the cost benefits analysis of foreign aid leads to certain policy implications. Non-tied aid increases the real cost to the donor. At the same times, tied and increase the burden of repayment for the recipient and reduces the real benefit of the aid. It is therefore, advisable that the recipient should insist on non-tied laid emphasis on the developed countries to ease the terms and conditions of aid to the less developed countries. They should adjust the aid that the grant equivalent per unit valve of aid given should increase rather than deceive this argument gain greater force from the fact that a number of less developed countries have very high debt service obligations and they fund it difficult to replay their accumulate debts.
Debts service in such countries with essential imports for foreign exchange earnings, thereby adversely affecting domestic savings, investment and hence development. Therefore, the developed countries should raise the grant equivalent per donor of foreign aid to the less developed countries it is better to change a rate of interest lower than the rate of return on loan in the recipient country.
Further, there is always the fear that the recipient may default on loan repayments. Therefore, the donor should provide grant rather than loans. But due to psychological and political reasons, it is in the interest of the recipient country to produced itself loans rather than grants. As for as this study is concerned, the researcher is highly concerned with the impact of direct foreign investment.
2.9. MACRO-ECONOMIC POLICE AND ENHLINLG ENVIRONMENT FOR DIRECT FOREIGN INVESTMENT IN NIGERIA.
A conducive economic setting is indispensable for high investment and economic growth. If good macro-foreign investment should be one characterized by stabiles predictability. In addition the macro-economic environment be one which.
i. Promote locative efficiency
ii. Encourage and reward individual initiative
iii. Greater a more level playing field for the private sector by dismantling monopolies and establishing more transparent regulatory
iv. Promotes a stronger and sounder barmaids system that prefect the saving of small depositors and elicits increased savings.
v. Encourage greater transparency and accountability in government and corporate affairs.
vi. Reduce uncertainty so as to asseverate the investment rewires to incentive packages.
SOUND MACRO ECONOMIC POLICES
According to investment for government of formulate and implement sound macro economic policies that promote growth through, who inflation, sound money, prudent fiscal policies and a sustainable current account/balance of payments positive should be designed to reduce instability endangered by externally generate socks.
REDUCTION IN EXTERNAL DEBT
Nigeria high external debt stock and debt, service burden are also views as inhibiting direct foreign investment. A reduction of external debt flow will be critical.
Consequently, the authorities need to articulate creative strategies foe bring about debt reductive so that the high debt stock and accompanying debt service burden do not continue to reduce investment and haunters economic growth.
2.10. DEREGULATION OF FINANCIAL SYSTEM
DILL and PRADHAN (1997:23) have established that if there is a financial liberalization, market determined interest rates would result in modesty positives interest rates. These in turn will increase the resource available to the finical system, since bank deposit offer a completive return will attract savings that were previous herd outside that formal financial sector.
More so, positive real interest rates will provide an incentive for borrower to invest in more productive thereby improving the productivity of the economy as a whole. Consequently, financials liberalization should lead to increase in both quantity and quality of financial intermediation by the burning system.
Financial deregulation can be there, stimulate economic growth and development through variety of channels. Since the financial system performs the vital function of raising funds, for and channeling funds to productive investments, successful financial liberalization is usually an important component of a country’s strategy for economic growth.
Domestic labour or other productive resources to carry out additional investment projects. The importance of such capital goods would only redirect domestic resources from other activities and probably lead to inflation. As a result, excess foreign exchange, including foreign aid might be on the importation of luxury consumption goods. Such a country is said to have a shortage of productive resources, which from a different viewpoint can be regarded as a shortage in savings. An outstanding example of saving gap analysis over look the possibility that excess foreign exchange can be used to purchase productive resources for example Saudi Arabia and Kuwiat used their surplus providers to pay for hired labour from non-oil exporting countries in the region and overseas. Saving-gap countries therefore do not need foreign and. most developing countries, however, are assumed to fall into second category, where the foreign-exchange gap binding. These counties have excess productive resources (mostly labour) and cell available foreign exchange is being used for imports. The existence of complementary domestic resources would permit them to undertake new investment project. If they had the external finance to import new capital goods and associated technical assistance. Foreign aid can therefore ply a critical role in overcoming the foreign exchange restraint and raising the real rate of economic growth.
Algebraically, the simple two-gap model can be formulated as follow:
i. The saving constraint or gap: starting with the identify that capital inflow (the difference between import and exports) and to investment resources (domestic saving) the saving investment restriction can be written as KF + SY (1) where F is the amount of capital inflows. If capital inflows (F) plus domestic saving (SY) exceeds domestic investment (I) and the economy is at full capacity, a saving gap is said to exist.
ii. The foreign-exchange constraint or gap: - If LDC investment has a marginal imports share in typically raging from 30% to 60% in most LDCS and the marginal propensity of import out of a unit of GNP (usually around 10% to 15%) is given the parameter, M3, the foreign exchange constraint of gap can be written as (M1– M2) 1 + M2 Y-E < F _ _ _ (ii) where E is the exogenous level exports. the term F enters both inequality constraints and becomes the critical factor in the analysis. if F,E and Y are initially assigned an exogenous current value, only one of the inequalities current value, only one of the inequality will prove binding, that is, investment (and therefore the output growth rate) will be constrained to a lower latter by one of the inequalities, countries can therefore be classified according to whether the saving of foreign- exchange constraint is binging mon-important from the view point of foreign aid analysis is the observation that impact of increased capital inflows will be greater where the foreign exchange gap (equation (ii)) rather than not imply that savings-gap model simply provide a grade methodology for determine the relative need and ability of different LDC to use foreign aid affectively as a means of economic growth.
The problem is that such gap forecast are very mechanistic and themselves constraints by the necessity of fixing amount and net capital inflow. In the case of exports, this is particularly constricting because of a liabilities of trade relation between the develop and developing word would contribute more toward relieving foreign –exchange gaps then foreign aid.
Although E and F are substituted in the equation
(ii) They have quite different indirect effect especially in the case where F represents interest-bearing loans that need to be rapid. Thus the alteration-loans that and exports parameter through both LDC and MDC government policy and in reality determines whether the savings or foreign exchange constraints is restricting the further growth of national, infant output) or infant whether neither is binding).
2.11. PROMOTION OF DIRECT FOREIGN INVESTMENT IN NIGERIA’S FOR ECONOMIC GROWTH.
vakil (2006:70) wrote that, Each country has to work out its own salvation particularly to find out which production method are feasible for it. The following techniques for use in underdeveloped country (a) those which can be easily learnt in a short time (b) those requiring investment specialist on skilled labour(d) this saving scarce resources rather than labour and finally those which raise the level of production and increase supply of minerals or electricity”.
The researchers accept that those points are the guidelines towards the use of appropriate technology in developing countries in keeping with their local condition by direct foreign investor. The researcher is of the opinion that each host country must provide foreign investment through proper choice of appropriate and relevant technology.
AUBREY (1951:50) emphasizes: it may be sound procedure to improve technology step by step in many place at one, rather then to a specific area”.
The researcher is of the opinion that countries intending to accept direct foreign investment must consider the invites idea as advantages in many ways it spread the benefits occurring more equally over the entire populations in skill formation at al level of worries and the size of market. It promotes more employment, better distribution of wealth and paves the ways towards self sufficient. Also the host country as the recipient of direct foreign investment must identify areas of needs and encourage investment in such areas only. The strategy of gradual change over from capital light and labour intensive method is best suited to underdeveloped countries in the early stages of industrialization. Government must have a policy that will not only economics the use of available natural resources but will also create large employment opportunities. By increasing the supply of agricultural and manufactured consumer goods, it will obviate the necessity of importing food and raw material by the direct foreign investors into the country. It will not be essential to import much capital goods. If they are available within the country. Thus, this strategy in the choice of direct foreign investment technology will to end to check inflationary tendencies and balance of payments difficulties inherent in the development process.
Some of the advantages or benefit of direct foreign investment in Nigeria are:
i. It helps promote growth I.e increasing labour force skill, promoting competition and facilitation the transfer f technology.
ii. It in turn encourages local enterprise to invest more itself in auxiliary industries or in collaboration with foreign enterprise. infact, foreign enterprises encourage local enterprise in two ways directly by creating demand for auxiliary or subsidiary services (like transport and training agents) which are economical for private foreign enterprise to provide.
iii. The inflow of DFi in Nigeria has help in raising productivity and hence the real wages or local labour. When direct foreign investment includes industrialization task place, the real wages of the newly, employed workers are higher than the real wages of workers in the rural sector of the economy. If DFI is in export oriented substitution industries, it leas to much higher social benefits than if it is in import-substitution industries are labour intensive they also provide larger employment opportunities.
iv. The inflow of DFI into Nigeria added to output of Nigeria than the return on capital from foreign investment. In this sense, the social returns are greater then private return on direct investment.
v. DFI also bring revenue to government, when it takes profit of foreign firms or gets regalities from concession agreements.
vi. Also, apart from profit from direct foreign investment generally ploughed back into the expansion, modernization or development or related industries.
2.12 THE IMPACT OF DIRECT FOREIGN INVESTMENT GROWTH FROM 1980 TO DATE
Kozlor.M. (1977:33) wrote the impact of direct foreign investment growth
“The underdevelopment theory and dependency schools have been criticized for wishing away class analysis and exploitation and for taking nation to nation exploitation as the most important issue in analysis. They have also been accused of denying life and internal dynamics to capital form action, accumulation and internalization of Local Social Classes in the colonies-hence their compradorization of the state and economy, however, underdevelopment theory and the dependency school have helped underline the fact the incorporation of the third world into the capitalist system and the creation of metropolis and satellite or centre and periphery relationship. They also “emphasize the role of transaction corporation (TWLCS) or multinational accumulation exploitation and politics the world”.
The researcher is the opinion that the entire modernization written showed much impacts of direct foreign investment is not only Nigeria economic growth but its total impacts on economy of less developed countries. Although the writer fancied to tell us how direct foreign investment penetrated into socio-political and other areas of the countries it is clear that direct foreign investment has more than economic impact on Nigeria.
GUNDER (1979:40) on his own perspective wrote that:
“the under development and the consequent dependence of most third world countries is as a result of their internal contradictions. To them thus problem can be explain by their lack of lose integration, diffusion of capital, technology and institutions, etc. to this world view, therefore, a way out the problem is for their world countries to seek foreign assistance, aid loan, INVESTMENT and unhindered operations of the multinational corporations (MINCS)”.
The researcher is of the opinion that the entire modernization school of thought is all about this the study by W.W. Rostow (1960:40) is the most arrangement celebration of modernization theory from the economic development stand point it is argued:-Development can come through the multinational corporations mechanism for transferring technology, capital and skill in management design and marketing. However, the current forms and penetration of foreign monopoly capital in developing countries in the major cause of their under development and dependency. The pain of procuring loan from the world bark and the IMF with stringent conditionality by the third word countries. Also foreign aid and technical assistance have found to further deepen the under development of third world countries”24
A critical look at the foregoing conditionality will reveal their pernicious impact on the third world countries who are caught in a debt traps and who have to take these bitter pick. Adoption of any policy measures and imitative couched in economic liberalism has further pauperized third world countries of which Nigeria is among and made their crises assume a tragic tragic proportion, especially under the renewed globalization policy. The call for new international economic order (NIEO) by the third world countries and the various come convention have all been met with rhetoric. The net effect of the activates of the world Bank and the IMF has been that the control of the commanding height of most third world economics are in the hands of those multination (MNCS), As a mother of fact, policies in most third word countries are no longer autonomous, they are externally initiated, packaged and closely monitored by the west.
In a nutshell, the activities of the world Bank and the IMF have in recent times, further contributed to the under development of the third world countries and have made than to be more dependence on and subservient to the west. The activities of multinational corporation have much wider impacts as means of direct foreign investment is socio-economic and political under development of the third world countries.
Dependency ecologists like Frank, Amin and Fernando hold the present economic and socio-political conditions prevailing in Nigeria and other less developing countries are the result of a historical international process.
According to Dos Santos (919970:50)” development emerged as a global historical phenomenon as a consequence of the formation expansion and consolidate of the capitalist system known as dependent capitalism.
The researcher is of the opinion that both the developed countries are integral parts of the capitalist system. But the global system in such that the development of the less developed countries.
According to Frank (1976:50 “the word capitalism system which produced the under development in the present”.
This has led to what frank call “the development of under development”. Frank traces the process of development of under development of the less developed countries have been incorporated into the world economy since the early days colonialism. At the second level, such less developed countries have become capitalist economics through incorporation into the world economy. At the third level, the incorporation of less developed countries in the world economy has led to metropolis-satellite in which the surplus generated at each level in the less developed countries is successively drawn off the developed countries is impoverished and the developed countries is enriched.
According to Amin (1977:530 capitalist relations are introduce in the less developed countries by the developed countries. It leads to dependent development which is an inappropriate pattern of development imposed upon the less developed countries by the developed countries. In such a system, the less developed countries by the developed countries, economies are without any internal dynamism of their own and are dominated by absentee capitalist of the less developed of the developed economy. The development of the developed countries and their dependence on the developed countries”
Todaro (1994:57) call “the neo-classical appendence model which contributes the existence and continuance of third world under development primarily to the historical evolution of highly unequal international capitalist system of rich country poor country relationship”.
The researcher draws conduction from all the above that less developed countries are hearing dependent on the developed courtiers for foreign capital foreign capital leads to external orientation of less developed countries by exploring primary commodities, imparting manufactures and making then dependence for industrialization of their economies.
According to sunkel (1969:30) it is the stagnation of agriculture high concentration of primary commodities for exports, high foreign exchange contents of industriazation and growing fiscal deficit in the less developed countries which necessitate foreign financing for their. In this worlds.
“It is this aspect which finally sums up the situation of dependence, this is the crucial; point in the mechanism of dependence”.
The researcher is of the opinion that foreign investors exploit less developed countries including Nigeria by insisting on the choice of project, making decisions on pricing, supply of equipments, know how and personnel and so on. Infect, they impose a development Patten that is not compatible with local needs. Further, the dependence on foreign capital leads to much higher outflow in the form of declared profits rojalities, transfer pricing, payment of principal and interest to foreign investors of the developed countries. Debt service and repayment drain third world wreath.
According to Amin (1977:60) Foreign aid students agriculture encourage trade and investment dependences and reinforces the dominance of exploitative entices of less developed countries. Thus foreign investment and aid signify dependence and as a means of exploitation of the less developed countries by the developed countries”.
Haberler (1959:61) Wrote that: Foreign trade as an engine of growth foreign trade possesses great importance for less developed countries, it provides the urge to develop the knowledge and experience that make development possible and the means to accomplished it”.
The writer further said. Overall conclusion is that international trade has made a tremendous contribution to the development of less developed countries in the 19th and 20th centuries and can be expected to make an equally big contribution in the substantial free policy from they point of view of economic development”
From which ever perspectives are can see direct foreign investment through activities of international organization and which multinational corporations in Nigeria can conclude that direct foreign investment have negative and positive impacts on the Nigeria economic growth from 1980 to date and forever.
CHAPTER THREE
RESEARCH METHODOLOGY
3.1. DESIGN OF THE STUDY
The design of the study related to the approach adopted in executing the study. Baridan (1990) described design of the study as: A frame work or plan used as a guide in the collection and analysis of data for a study.
There are different types of research design depending on the nature of the researchers and the one to adopt depend on the nature of the study.
Since this study is decretive questions are developed to secure specific kinds of data that are capable of examining the phenomena under study to a significant level of accuracy. To this and questions were administrated to all the project managers of all the ongoing project of the company under investigation. The researcher employed both the closed and opened questions. The researcher did not disguise any of the questions, also the questionnaire are structured. In addition to the questionnaires that were administered on the project managers, Oral interviews were also conducted on them to enable the researcher generate more relevant primary information in determine the sample size since the population size is finite, while the simple random sampling was used as the sampling techniques.
3.2. AREA OF THE STUDY
The area of this project, discussed mainly on the import of direct foreign investment as the area of the study.
3.3. POPULATION OF THE STUDY
Population can be defined as the entire object to be studies.
It can be defined as a set of data that consist of all conceivable, possible or hypothetically possible observation of certain phenomenon
(Williams 2004)
Population refers to people or subject of the geographical area where the study covers.
the population of this research work would be the entire staff of Johnhot investment company plc lokoja which include ten (10) senior staff, twenty four (24) middle staff and thirty six (36) junior staff all amounting to seventy (70)
3.4. SAMPLE OF THE STUDY
Sample according to Toluhi (2001:56) is a subgroup extracted from the research population for study. For the purpose of making generalization about the population from which the sample was drawn.
in most cases, we need information concerning a group usually of person, firms or household e.t.c we usually limit out study to some of selected people from the group with a view to extend our finding to the entire group of people.
Due to the nature of the sample size of the research work would be sixty (60) staff out of seventy (70) staff in the company under study.
3.5. ADMINISTRATION AND RETRIEVAL OF INSTRUMENT
The questionnaire used for this project work contains question relating to john Holt company investment
3.6. PROBLEM OF METHODOLOGY
Date collection is very important in any project work. IN the process of data collection, the researcher come across some problems, which hinder the collection of data needed. These problems are:
A. LACK OF ENOUGH FINANCE: The researcher encounter financial problem due to the money at hand is not sufficient for the research to look all requirements for the project that encompass money.
B. SECRECY: This is another methods of methodology, most workers even the high rank or lower level workers did not give the correct answer, some part of the answer are hidden and may be for the fact that, they do not want the public to know more especially the technical areas of the organization.
The time for collecting information from the respondent (management) was delay because the expended by the research is not true due to the respondent were not able to give detail information need for that particular time, this is refers to time lapse inconvenience from the respondent.
3.7. METHOD OF DATA ANALYSIS
The information collected from the data together would be analyzed base on the response of respondents, and hypothesis will be tested using Chi-square is popularly donated by the sign X2 has been deemed appropriate sampling distribution when disusing about two hypothesis test because of the frequency with which the normal or ordering data are collected in practical situation.
In carrying X2 test, the characteristic of the object or the attribute are display in a table collect contingency table.
Percentage method would be used to analyze the data why hypothesis would be tested using Chi-square test.
The contingency table whether not two categories variable are related to each other,.
The Chi-square statistic is given below:
X2 = S (0 - S)2
S
Where O = Observed Frequency
S = Expected Frequency
The expected frequency (S) will be computed or the assumption that there is independence or relationship is true.
Therefore the trust state X2 tend if (Ho) null hypothesis is not true for R and C continence table
The test statistics X2 calculated is appropriate distributed with (r – 1) ( c – 1_ degree of freedom.
CHAPTER FOUR
4.1. DATA PRESENTATION AND ANALYSIS
PRESENTATION OF DATA
Here the researcher used frequency table to present analysis and interpret all the data collected from primary source of data collection (questionnaire).
Ten (10) questions were drafted out in the questionnaire. Seventy (70) copies of the questionnaire were distributed out of the 70 copies distributed 60 were returned and fond usable.
ANALYSIS OF DATA
In this section the data gathered will be analyzed on this ground the analysis shall be done based on the available data which is considered to be representative enough to arrive at a conclusion.
Table A.1.
SEX DISTRIBUTION OF THE RESPONDENTS
| Sex | Frequency Of Response | Percentage |
| Male | 45 | 75.00 |
| Female | 15 | 25.00 |
| Total | 60 | 100.00 |
Source: field survey 2011.
Table 4.1. Showed 75 percentages are male, while 25 percentages are female.
Table A.2.
AGE DISTRIBUTION OF THE RESPONDENTS
| AGE RANGE | FREQUENCY OF RESPONSES | PERCENTAGE |
| 25 – 30 | 15 | 25.00 |
| 31 – 36 | 12 | 20.00 |
| 37 – 42 | 3 | 5.00 |
| 43 – 48 | 3 | 5.00 |
| 49 – 54 | 15 | 25.00 |
| 55 above | 12 | 20.00 |
| Total | 60 | 100.00 |
Source: field survey 2011.
Table 4.1.2. Clearly shown that 15 is out of total respondent are within the age range of (25 -30) representing 25% of the respondent. 12 are within age range of (31 – 36) constituting 20% of total respondents. This is followed by range (37 – 42) consisting of 3 respondents representing 5% respondents also fall within range (49 – 54) is made up of 15 respondents representing 25% while range 55 is made up of 12 respondent representing 20%.
Table 4.1.3.
EDUCATION QUALIFICATION
| QUALIFICATION | frequency response | percentage % |
| SSCE/GCE | 3 | 5.00 |
| OND/NCE | 6 | 10.00 |
| HND | 21 | 35.00 |
| B.S.C | 30 | 50.00 |
| Total | 60 | 100.00 |
Source: field survey 2011.
Table 4.1.3. Showed that 6 respondents possess OND/NCE, 21 posses HND while 30 posses B.S.C. This means that 50% of the total respondents has B.sc. 35% has HND, 10% has OND/NCE while 5%has SSCE/GCE.
Table 4.1.
Is there any dire foreign investment in Nigeria?
| Response | frequency of response | percentage % |
| True | 45 | 75.00 |
| False | 15 | 25.00 |
| Undecided | ___ | __ |
| Total | 60 | 100.00 |
Source: field survey 2011
Table 1 show 45 respondents representing 75% of the total respondent believes there is direct foreign investment in Nigeria 15 respondents representing 25% were false.
Table 4.2.
Do you agree that direct foreign investment contributed positively to the economic growth of Nigeria?
| Response | Frequency Of Response | Percentage % |
| True | 48 | 80.00 |
| False | 12 | 20.00 |
| undecided | __ | ___ |
| Total | 60 | 100.00 |
Source: field survey 2011
Table 4.2. Showed 48 respondents admitted that direct foreign investment contributed positively to the economic growth of Nigeria, 12 admitted it doesn’t, they represent 80% and 20% respectively.
Table 4.3.
Do you accept that foreign investment has significant impact on the economic growth of Nigeria?
| Response | frequency of response | percentage % |
| True | 42 | 70.00 |
| False | 18 | 30.00 |
| undecided | __ | ___ |
| Total | 60 | 100.00 |
Source: field survey 2011
Table 4.3. Shows 42 respondents constituting 70% accepted that direct foreign investment has significant impact on the economic growth of Nigeria while constituting 30% were false.
Table 4.4.
Is direct foreign investment welcome development?
| Response | frequency of response | percentage % |
| True | 48 | 80.00 |
| False | 12 | 20.00 |
| undecided | __ | __ |
| Total | 60 | 100.00 |
Source: field survey 2011.
Table 4.4. shows 48respndents constituting 80% admitted that direct foreign investment is a welcome development , 12 of them constituting 20% were false.
Table 4.5.
Do you agree that foreign investment has more than economic implication in Nigeria?
| Response | frequency of response | percentage % |
| True | 48 | 80.00 |
| False | 12 | 20.00 |
| undecided | __ | __ |
| Total | 60 | 100.00 |
Source: Field survey 2011.
Table 4.5. shows clearly that 48 respondents constituting 80% admitted that direct foreign investment has more than economic implication in Nigeria while 12 respondent constituting 20% were false.
Table 4.6.
Is direct foreign investment essential for Nigeria economic growth?
| Response | frequency of response | percentage % |
| True | 54 | 90.00 |
| False | 6 | 10.00 |
| undecided | __ | __ |
| Total | 60 | 100.00 |
Source: field survey 2011
Table 4.6. Shows 54 respondent constituting 90% of the total respondent said direct foreign investment is essential for Nigeria economic growth. While 6 constituting 10% were false.
Table 4.7.
Do direct foreign investment financial status positively?
| Response | frequency of response | percentage % |
| True | 49 | 81.00 |
| False | 11 | 19.00 |
| undecided | __ | __ |
| Total | 60 | 100.00 |
Source: field survey 2011
Table 4.7. Shows 49 respondents constituting 81 admitted that direct foreign investment has positive effect on Nigeria financial status, 11 constituting 19% of the total respondent were false.
Table 48.
Does direct foreign investment have negative implication?
| Response | frequency of response | percentage % |
| True | 42 | 70.00 |
| False | 18 | 30.00 |
| undecided | __ | __ |
| Total | 60 | 100.00 |
Source: field survey 2011.
Tables 4.8. shows 42 respondents constituting 70% admitted that direct implication on Nigeria economic growth with 18 constituting 30% of the total respondents were false.
Table 4.9.
Direct foreign investment has significant impact in Nigeria economy growth
| Response | frequency of response | percentage % |
| True | 60 | 100.00 |
| False | __ | __ |
| undecided | __ | __ |
| Total | 60 | 100.00 |
Source: field survey 2011
Table 4.9 shows clearly that 60 respondents constituting 100% admitted that direct foreign investment create job opportunity in Nigeria.
Table 4.10
Direct foreign investment has only international impact on Nigeria economic growth.
| Response | frequency of response | percentage % |
| True | 60 | 100.00 |
| False | __ | __ |
| undecided | __ | __ |
| Total | 60 | 100.00 |
Source: field survey 2011
Table 4.10 show that 60 respondents constituting 100% of the actual or total respondents said direct foreign investment create good relationship between two countries.
From the analysis of data and result it shows that direct foreign investment has a great impact on the Nigeria economy.
4.2. TEST OF HYPOTHESIS
In testing the research hypothesis the Chi-Square was used and for proper understanding the following variable contained in the table, in calculating X2which is the value of Chi-square
X2 = S (0 – E)2
E
Where S = summation
O = stand for observed frequency
E = Expected frequency
The degree of freedom is determined by the function.
D.F = (c -1)
Where C = number of restriction total
One (1) is constant
It should be noted that the degree of freedom is to be at level of significance at 5% (0.o5)
DECISION RULE
The decision rule states that:
If the observed or calculated value (X2) is greater than the X2table = rejection of Hi.
If the observed or calculated value is less than or equal top the table value X2accepted (Ho).
CHI – SQUARE hypothesis I
Ho: Direct foreign investment has no significant impact in Nigeria economic growth.
Hi: Direct foreign Investment has significant impact in Nigeria economic growth.
| Response | Frequency Of Response | Percentage |
| True | 60 | 100 |
| False | __ | __ |
| Undecided | __ | __ |
| Total | 60 | 100 |
Source field survey. (2011)
Chi – square test.
| D | E | D –E | (0 –E)2 | (0 –E)2 E |
| 60 | 20 | 40 | 1600 | 80 |
| _ | 20 | -20 | 400 | 20 |
| _ | 20 | -20 | 400 | 20 |
| | 60 | O | | 120 |
Level of significant = 5% (0.05)
D.f. = (r -1) (c – 1)
2 – 1 = 1
X2= 0.05 (1)
X2= 3.84
Decision
X2calculated in greater than X2 tabulated therefore null hypothesis will be rejected which means direct foreign investment has no impact in Nigeria economic growth.
Hypothesis II
Ho: Direct foreign investment has only international impact on Nigeria economic growth
Hi: Direct foreign investment has no international impact on Nigeria economic growth.
Table 4.10
| Response | Frequency Of Response | Percentage |
| True | 60 | 100 |
| False | __ | __ |
| Undecided | __ | __ |
| Total | 60 | 100 |
Source: field survey (2011)
| D | E | D –E | (0 –E)2 | (0 –E)2 E |
| 60 | 20 | 40 | 1600 | 80 |
| _ | 20 | -20 | 400 | 20 |
| _ | 20 | -20 | 400 | 20 |
| 60 | 60 | O | | 120 |
X2= 0.05 under one = 3.84
Decision
Calculated is greater than X2 tabulated therefore null hypothesis will be rejected which means “Direct foreign investment has no impact in Nigeria economic growth”.
4.3. DISCUSSION OF FINDING
From the above analysis, we can understand that most workers in John holt investment would resign their appointment if they get a better paid employment elsewhere. And from the analysis above, we can see that the management has to improve on their techniques of motivating workers.
It can also be seen from the analysis that workers performance is a function of their expected reward. The way they put in more effort to work is determined or is a matter of expectation. And also, it could be seen that what the workers want in an organization or industry is the satisfaction of their needs through rewards.
We can also see from the data analysis that when workers are sufficiently rewarded they would perform better.
It can be understood from the study that most of the workers agreed with assumption.
Most of the workers are also in agreement that the payment of fringe benefit and increase in salary is the only way that can make direct foreign investment performance to be worthwhile.
CHAPTER FIVE
5.0. SUMMARY CONCLUSION AND RECOMMENDATION
5.1. SUMMARY OF THE FINDING
In the course of this study, the researcher finding are summarized as follows:
1. Developing countries depend on direct foreign investment to attract capital equipment and infrastructure from developed countries. The fact is that every developed country that wants to embark on development programmes needs the spoor of direct foreign investors to complement the existing local production factors for development.
2. Direct foreign investment has significant impacts in Nigerians economic growth. The Issued and challenges of John Holt Company and technological acquisition from developed countries can only be possible if foreign investors are encouraged to participate in local environment and industries operating within the country. From the finding, the researcher exposed here that no les developed countries like Nigeria can experience high economic growth rate without according to direct foreign investment within.
3. Finally, the researcher found that direct foreign investment has more than economic implication in a country. It has social, political legal, technological and identification implication of a country in the country or nations.
5.2. CONCLUSION
The researcher through investigated the impacts of direct foreign investment on the economic growth of Nigeria. Direct foreign investment is the extension of enterprise which involves flow of capital, technology and entrepreneurial skill to the host economy where they are combined with local factors in the production of goods for export markets in the production of goods for export markets. The researcher stopped here by suggesting that more work has to be done on the subject matter of this study. This will enable everybody to understand and know the actual impacts of direct foreign investment on the economic growth. At the end, the government will know and choose the best areas of economic development that would attract direct foreign investors to participate that can have positive impact on the economic growth of the country.
5.3. RECOMMENDATION
The following recommendations were made as a contribution toward alleviation of the problem of foreign markets as well as some of the problems faced by the John Holt investment company.
i. Incentive for banks: The federal government banks incentives for the volume of financial assistance given to foreign trade market. Banks record a particular stated percentage (%) of their aggregate advance for foreign trade should be given a standard monitory discount at the end of the year. These incentives will spur the banks to engage more in foreign trade market.
ii. To mobilized foreign trading: particularly in the agricultural sector, provision of storage facilities to immunized crop losses. Much are reported to be very high especially for pers is table agriculture processing factories to turn raw-product into “ready to save” products for foreign trading should be high priority”.
iii. The federal government should ensure the proper funding of the company implement all the incentive approved by the government qualified and experiment staff should be employed and encourage for effective performance
iv. Complete and well established companies should be selected to take part in both home and foreign trade- fairs so that in returns they can satisfy demand of their foreign customers.
BIBLIOGRAPHY
Anyanwu (1997:24) International Market Strategy: Wobum: Butter Worthy-Heineman.
Bower.A. (1974:11) The Role Of Foreign Aid And Important On The Economy Of The Country 10thEdition: Mc Graw-Hill Companies, Inc
Edward Shapiro (1980:15) Development the Profit Theory Of Investment: Seminar Paper Presentation.
Et-Al (1999:29) Economic Growth of The Country: 2nd Edition Onibonje Press Ile-Ife.
Haberler (1975:61) The Foreign Trade As An Engine Of Growth: The Africa Guidance August Vol.2
Kozlor.M. (1977:33) The Impact Of Direct Foreign Investment Growth: Published By Wobum Butter.
Lak (1975:20) International Market: 6th Edition Oluo South Western, A Division Of Thompson.
Myrdal (1970:20) Foreign Capital Investment: 4th Edition Mc Graw-Hill Companies.
Santos (1970:17) The Economic Condition Of A Country And Its Development.
Simon .U. (1960:22) The Direct Foreign Investment: 10th Edition: Home Wood, Irwon Inc.
APPENDIX
Department Of Business Administration and Management Studies,
Kogi State Polytechnic,
Lokoja, Kogi State.
Dear Sir/Ma,
I am a final year student of the above mentioned institution and currently undertaking a research work on the topic: “The impact of direct foreign investment on the Nigeria economy” (a case study of John Holt investment company lokoja).
This research work is purely endemic exercise required in partial fulfillment for the award of Higher National Diploma (HND) in business administration and management.
I salute your co-operation in fully this questionnaire and returning some to me as possible.
You are assured that the information provided will be treated with utmost confidentiality. Find attached is the copy of the questionnaire.
Thanks for your co-operation.
Yours Faithfully
Yakubu Haruna
QUESTIONNAIRE ON DIRECT FOREIGN INVESTMENT ON THE NIGERIA ECONOMY.
INSTRUCTION
Please tick the appropriate option in the box provided e.g. (ΓΌ)
1. Designation:
Top level management ( )
Middle level management ( )
Lower level management ( )
2. Sex:
Male ( )
Female ( )
3. Marital Status:
Marriage ( )
Single ( )
4. Highest qualification obtained:
s.s.c ( )
NCE/ND ( )
B.sc/HND it equivalent ( )
Post graduate ( )
SECTION TWO: OTHER INFORMATION
1. Is there any direct foreign investment in Nigeria?
True ( ) False ( )
2. Do you agree that direct foreign investment contribute positively to the economic growth of Nigeria?
True ( ) False ( )
3. Do you accept that foreign investment has significant impact on the economic growth of Nigeria?
True ( ) False ( )
4. Is direct foreign investment welcome development?
True ( ) False ( )
5. Do you agree that foreign investment has more economic implication in Nigeria?
True ( ) False ( )
6. Is direct foreign investment essential for Nigeria economic growth?
True ( ) False ( )
7. Does direct foreign Investment affect Nigeria financial status positively?
True ( ) False ( )
8. Does direct foreign investment have negative implication?
True ( ) False ( )
9. Does direct foreign investment create job opportunity in Nigeria?
True ( ) False ( )
10. Does direct foreign investment create good relationship between two countries?
True ( ) False ( )
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