Transcampus.com

advert
Home Instructors Journals ContactUs
Home

 

Instructors

 

Journals

 

Contact Us

 

JOURNAL OF RESEARCH IN NATIONAL DEVELOPMENT VOLUME 5 NO 2, DECEMBER, 2007

FOREIGN DIRECT INVESTMENT AND POVERTY REDUTION IN NIGERIA

Victor O. Omorogbe and D.G. Ubeagbu
Department of Economics and Development Studies, Igbinedion University, Okada

Abstract

The relationship between Foreign Direct Investment and growth has been realized or discovered by most economist. Foreign  direct investment is a strong force which has a positive impact on growth and development through employment generation which leads to increase in income for the people, who in turn save and this is further reinvested into the economy for development and growth. Thus, we experience reduction in poverty. As such, it has to be adequately planned for, if a nation is to experience a reasonable reduction in poverty through growth/development her economy This paper/work has enunciated that it is possible for Nigeria to reduce her poverty level throughout without the right conducive environment, political stability institutional and structural reforms that stimulate foreign direct investment. An equation model was adopted for empirical analysis that embrace the impact of foreign direct investment as GDP per capital as a proxy for measurement of poverty level. The result obtained showed a satisfactory performance  of foreign investment on the GDP   per capita in the Nigerian economy
Keywords: poverty; reduction; investment; foreign.

 


Introduction
The importance of foreign capital to developing countries is well known. It supplements their domestic savings and it is often accompanied with technology and managerial skills which are indispensable in economic development. Foreign direct investment can contribute in significant ways to breaking of the growth  ___poverty vicious circle, and there lies Nigerians hope. The Nigerian government hopes that FDI can make up for domestic capital shortfalls, provide technology, managerial skills, facilitate access to foreign market and generate both technological and efficient spillovers to local firms. By providing access to external markets, transferring technology and building capacity in the local firms generally, FDI is expected to improve the integration of the continent global economy, spur economic growth and alleviate poverty.
Direct foreign investment has been characterized as the best form of foreign finance. The packages of FDI comes with finance, technology and highly skilled personnel (Lall and Streeton 1977). Indeed in the case of Nigeria as in 3rd world countries FDI was the main channel through which  their import-substitution industrialization strategies were prosecuted.
It is widely believed that given the appropriate host-country policies and  a basic level of development, benefits that might accrue from FDI include employment creation, the acquisition of new technology and knowledge, increased tax revenue from cooperate profits generated by FDI. All of these form of benefits are expected to contributed to higher economic and employment growth, which is the most important and effective tool for achieving improvements in human well being for alleviating poverty in Nigeria.
Although, the impact of FDI on poverty alleviation depend principally on many factors such as host country policies and institutions. The most efficient way FDI help in alleviating  poverty is the widening access to employment opportunities.
The ability of Nigeria to alleviate poverty depends on adequate inflow of foreign investment resources. The country has been experiencing difficulties in her effort to alleviate poverty for decades now. At present, majority of Nigerians are living below the poverty level. Consequently given the low level of per capital  income characterizing the less developed economies, the traditional model of economics assumes that average and marginal consumption propensities are high, savings are low and that the formation of new productive capital is restricted.

Usman (1998) highlighted reasons for the slow economic progress in Nigeria to include monocultural economy, high population growth rate, import dependency, political instability etc. Based on the above scenario, it is discovered that there exist a gap between the domestically available supply of savings, foreign exchange, government revenue and skills and the planned level of the resources necessary to achieve development targets that leads to poverty alleviation in Nigeria. This gap necessitates the need for external resources to augment domestic resources in the country. These external resources can be in the form of foreign aid and or grant, short term credit, state loans and private investment. But it is in the interest of Nigeria as a country in getting out of the poverty circle through foreign direct investment, because FDI provides investment capital, technical skills and enterprise, since  natural resources are available in Nigeria.
Foreign direct investment  has positive effects on poverty alleviation through three ways:-
(a)        Labour intensive economic growth with export growth as the most important engine.
(b)        Technological innovations and knowledge spillover effect from FDI based firms on local economy.
(c)        Poverty alleviation government programs/projects financed by
tax revenue collected from FDI based firms.

To this end, the rest of the paper is divided into five sections. Section II reviews the work on poverty alleviation and Foreign direct Investment. Section III also look into the data and Analysis while Section IV provide the concluding remarks and suggestions.

Foreign Direct Investment in Nigeria
            The flow of capital  funds across national boundaries is not a new development. As far back as 16th century, business entrepreneurs had engaged in business activities that involved movement of capital funds from one nation to another Richardo Robinson (19730.
            This earlier form of capital funds across national borders was commercially motivated. At the time business entrepreneurs from far away Europe were in search of personal fortunes in the foreign land of Asia and Africa. These businessmen brought certain items like spices, precious tones and resold them. They made exorbitant profit from this act. The nature and manner these pioneers of foreign business enterprises carried out their activities led Robinson to describe their activities as “legalized piracy”. Though these early foreign business enterprises with nationals of other countries did not results in direct foreign investment actually, it least  constituted the earliest business venture to cross national boundaries.
            However, with the above, industrial revolution in the second half of 19th century, interest shifted from just  brining of exotic articles to promotion of final goods which at times demanded that business enterprises be set up in these countries and management directed by those foreign entrepreneurs with the requisite skills. The advent of requisite enterprise   really marked the beginning of foreign direct investment. Infact, the industrial revolution of the 19th century did give rise to two pressures among others new  mass production machines. Secondly, the need for the market to absorb the products of the industries. Both needs were taken care of through the development of plantations, mines and infrastructures in overseas countries that were colonized earlier during the commercial capital era.

It is against this background that some foreign based companies decided to set up and run business enterprises outside their home countries, the inflow of these multinational enterprise into the geographical area called Nigeria has a political entity. Nigeria only became a political entity in 1914, when the Northern and Southern  provinces of Nigeria wee amalgamated by Lord Lugard.
            Before 1914, some multinational corporation in banking, commercial and mining sectors had already established their business in Nigeria. For instance, the African Banking Corporation (ADB) began operation in 1891 while Royal Niger Company that traded in palm produce along the Nigerian coast west established in 1886. Furthermore were other multinational corporations.
            Foreign direct investment (FDI) is an integral  part of an open and effective international economic system and a major catalyst to development. Developing counties, emerging economies and countries in transition have come increasingly to see FDI as a source of economic development and modernization, income growth and employment.
            The study of foreign direct investment for development attempts primarily to focus on the overall effect of FDI on macroeconomic growth and other  welfare enhancing processes, and  on the channels through which these benefits take effect.
            FDI triggers technology spillovers, assist human capital formation, contributes to international trade integration, help create a more competitive business environment and enhances enterprise development. All these contributes to higher economic growth which is the most potent for alleviating poverty in developing countries. Moreover, beyond the strictly economic benefits, FDI may help improve  environmental and  social conditions in the host country by for example, transferring “Cleaner” technologies and leading to more socially responsible corporate policies.

Poverty Alleviation
            A concise and universally accepted definition of poverty is elusive largely because it affects many aspects of the  human conditions including physical, moral and psychological. Different criteria have therefore been used to conceptualize poverty. Most analyses follow the conventional  view of poverty as a result of insufficient income for securing basic goods and services. Others view poverty in part as a function of education, health, life expectancy, child morality etc. Blackwood and Lynch (1994), identify the poor using the criteria of the levels of consumption and expenditure.
            Further, Sen  (1983), relates poverty to entitlements which are taken to be the various bundles of goods and services over which one has command taking into cognizance the means by which such goods are acquired (e.g. money) and the availability of the needed goods. Yet, other experts see poverty in very broad terms, such as being unable to meet “basic need (Physical; food, healthcare, education, shelter etc and non-physical participation, identity etc) requirements for a meaningful life (world bank 1996).
            Social sciences literate is replete with attempts by economist and social scientists to conceptualize the phenomenon of poverty. Broadly, poverty can be conceptualized in four ways, these are lack of access to basic needs, lack of or impaired access to productive resources, outcome of inefficient use of common resources, and result of “exclusive mechanisms”. Poverty is lack of access to basic needs/goods that is essentially economic. It explains poverty in material terms and specifically employs consumption based categories to explain the extend and depth of poverty, and establish who is and who is not poor. Thus, the poor are conceived as those individuals or households in a particular society, incapable of purchasing a specified basket of basic goods and services. Basic goods are nutrition, shelter/housing, water, healthcare, access to productive resources including education, working skills and tools political and civil rights to participate in decisions concerning  socio-economic conditions (Streeten and Burki, 1978).

The first three are the basic needs/goods necessary for survival. Impaired access to productive resource (agricultural land, physical capital and financial assets) leads to absolute low income, unemployment, undernourishment etc. Inadequate endowment of human capital is also a major cause of poverty. Generally,  impaired access to resources  shifts the focus on poverty and it curtails the capability of individual to convert available productive resources to a higher quality of life. (Sen, 1977) and (Adeyeye, 1987).
            A typical poor nation exhibits features of widespread or mass penury reflected in the  pauperization of the working and professional classes including artisans. In such a nation, the phenomena of unemployment and under-employment are widespread. It lacks adequate welfare services. Another major feature of a poor nation is poor infrastructural facilities characterized by inadequate supply of clean water, inadequate and poor housing facilities, inadequate transportation facilitates especially road network, poor telecommunication system and inadequate supply of electric power for both household and business uses. The national product of a poor nation is low, reflecting the low productivity of its average labour force.
            A major requirement for alleviating poverty in any country is the pursuit and maintenance of a strong economic growth. The growth pre-requisite for poverty alleviation is a necessary but not a sufficient condition for reducing the poverty of the nation and its citizens. The depth and severity of the poverty of a nation cannot be alleviated where acute inequality of income distribution not only persists but also worsen over time.
            This is what happen where there is growth but absence of development. It cannot therefore be overemphasized that economic growth must be accompanied by a more equitable income distribution in order to alleviate poverty in any nation, especially Nigeria as a developing country.
            The world Bank development report (1990) outlined four ways by which the income of the poor in the society can be raised:-

  • Increase in the demand for the labour of the poor class and thereby raise their price (wage rates).
  • Increase in the Poor’s access to physical assets such as land in order to raise their productivity.
  • Provision of social services such as education and health to the poor and
  • Transfer of current income to the poor in the form of cash or feed subsides.

Nigeria have come increasingly to see foreign direct investment (FDI) as a source of economic development, modernization, income growth, employment and so poverty reduction. Based on a literature survey on the role of FDI in poverty alleviation,  FDI have postivie effects on poverty reduction mainly through three ways:-

  • Labour intensive economic growth with export growth as the most important engine.
  • Technological,  innovation and knowledge spillovers effects from FDI-based firms on local economy, and
  • Poverty alleviation government program or projects financed by tax revenues collected from FDI – based  firms.

Poverty  is almost invariably linked to low or stagnated economic growth and unemployment. It is generally argued that FDI is essential for generating economic growth and hence creating new job opportunities, and thus also alleviating poverty. Where domestic resources to finance investment are limited, foreign capital inflows are necessary.

Definition of Terms

Foreign Investment
            Foreign portfolio investment consists of the acquisition of assets by a foreign national or company in a domestic  stock money market. In other words, it refers to holding of transferable securities, equity share, debentures, bonds, promissory notes and money market instruments (e.g. treasury bulls commercial papers) issues in a domestic market by the nationals of some other countries.

Foreign Direct Investment (FDI)
            Foreign direct investment (FDI) is the purchase and control of an entity in one country by residents of another. IMF (1977), identified foreign private investment as investment that is made to acquire a lasting interest in an enterprise as investment that is made to acquire a lasting  interest in an enterprise operating in economy other than that of the investor, the investors purpose being to have an effective voice in the management of the enterprises.

Poverty
            Poverty has no precise definition. It has no universal adopted definition that can be applied to all societies and all nations of the world. Inspite of the absence of a precise and an all embracing definition of poverty. It is quite easy to recognize or identify the attributes of a poor person or the characteristic of a poor nation. A poor person or household generally lacks the basic necessities of life such as adequate shelter, balance diet that meets the standards quality, quantity and imposition.
            The world bank characterize poverty as a situation in which  individual (households) is unable to attain an acceptable minimum standard of living, giving rise to several material deprivation, absence of recreational opportunities, lack of access to economies as well as political power, and inferiority complex isolation and social degradation.

Poverty Alleviation:
            Alleviation means to reduce pain and suffering in order  to making something bearable.
            Poverty alleviation is any process which seeks to reduce the level of poverty in community, or amongst a group of people  or countries. This also means activities that are aimed at minimizing the suffering associated with poverty.
            Some of the popular methods in the alleviation o poverty are education, economic development and income redistribution.

Multinational Corporations (MNCs)
            A multinational corporation (MNC) is a concrete example of foreign private direct investment and is a company firm or enterprise with its headquarter in a developed country and also operates in other countries, both developed and developing.
            Sanjaya Lai and Streetman (1977) define the multinational corporation from economic, organizational and motivational viewpoints. Their emphasis was on the size, geographical spread and extent of foreign involvement.

The Impact of FDI on Poverty Reduction
            FDI is though to contribute to economic development (and therefore poverty reduction) through  initial macroeconomic stimulus and by raising total productivity and efficiency of resource use in the recipient economy. Economic growth is the most potent tool for poverty reduction  in developing countries (UNCTAD, 2002a OECD 2002).
            Although growth is not a sufficient condition for poverty alleviation there is evidence that higher income in developing countries benefit the poor segments of the population proportionately (OECD, 2002).
            The greatest contribution of FDI to economic growth and therefore poverty reduction occurs through technology transfer. Technology is defined as any tangible or intangible resource that can generate economic rent for host country firms by for example, improving total factor productivity, (Blomstrom et al (1999). It includes managerial skills, know-how, production techniques, machinery, information and other intangible forms of capital MNCs are the main transmitters of technology, with each mode of foreign investment (FDI) being a potential channel for technology transfer.

Technology transfer can occur directly to local firms involved in joint venture with the MNC or indirectly as a spillover benefit to unaffiliated local firms. Vertical linkages between affiliates and their suppliers and customers in the host country, horizontal linkages between the affiliates and domestic firms in the same industry, labour turnover from the affiliates to domestic firms and internationalization of research and development.

FDI and Technology Transfer – Spillover Channels to Domestic Firms
When a firm sets up a plant overseas or acquires a foreign plant, it does so in the expectation of realizing a higher rate of return than a given home country firm with an equivalent investment. The source of the higher return is the technological advantage alluded to the investment. Whatever its source, the only way domestic firms can gain from external benefits is if some form of indirect technology transfer takes place – multinational firms will not simply handover the source of their advantage.
There are four channels through which spillovers might boost productivity in the host country; Imitation, Skills acquisition, Competition and Exports.

  • Imitation: This is the classic transmission mechanism for new

products and process. One mechanism commonly alluded to in the theoretical literature on technology transfer from developed to developing economies is reverse engineering (Das 1987, Wang and Blomstrom, 1992). Its scope depends on the complexity of product and processes with simple manufactures and processes easier to imitate than more complex ones. The same principles applies to managerial and organizational innovations, although these are thought to be easier to imitation. Any upgrading to local technology deriving from imitation could result to a spillover, with consequent benefits for the productivity of local firms.
Imitation involves adoption of new production methods and new management practices.

  • Skill acquisition: Adoption of new technology can also occur

through the acquisition of human capital. Even when the location pull for FDI is relatively low wages, multinational firms tend to demand relatively skilled labour. Generally, they will invest in training and it is impossible to look in such resources completely. The movement of labour from multinational firms to other existing or new firms can generate productivity improvements through two mechanism: through a direct spillover to complementary workers and through knowledge carried by workers who move to another firm.
Haacker (1999) and Fosturi and others (2001) argue that the knowledge that workers bring with them is the most important channel for spillovers and some empirical work support this (Djankow and Hoekman 1999, Gorg and Strobl 2002c).

  • Competition: many models emphasizes the role of competition (Wang and Blomstrom (1992), Glass and Saggi 2002). Unless an incoming firm is offered monopoly status, it will produce competition with indigenous firms. Even if indigenous firms are unable to imitate the multinationals technology and production processes, entry of the multinational firm puts pressure on them to use existing technology more efficiently. Competition may increase the speed of adoption of new technology.

 

Foreign Direct Investment for
Development: Maximizing
Benefits and Minimizing Costs

Foreign direct investment (FDI) is an integral part of an open and effective international economic system and a major catalyst to development. Developing countries, emerging economies and countries in transition have come increasingly to see FDI as a source of economic development and modernization, income growth and employment.
            The study of  foreign direct investment for development attempts primarily to focus on the overall effect of FDI on macroeconomic growth and other welfare enhancing processes, and on the channels through which these benefits take effect.
            FDI triggers technology spillovers, assist human capital formation, contributions to international trade integration, help create a more competitive business environment and enhances enterprise development. All these contributes to higher economic growth which is the most potent tool for alleviating poverty in developing countries. Moreover, beyond the strictly conditions in the host country by for example, transferring “Cleaner” technologies and leading to more socially responsible corporate policies.

Presentationand
Interpretation of Regression
Result
            This section deals with the presentation of data, as well as presentation of the result of the regression analysis, interpretation of the regression result and its discussions.


Table 1
            Table 1 shows data on foreign direct investment, the registered unemployed, lending rate of interest and GDP per capita.

Year

Foreign Direct Investment

Registered Unemployed

Lending Rate of Interest

GDP per Capita

1980

404.1

256,623

9.50

600.3

1981

334.7

188,438

10.00

581.3

1982

290.00

106,496

11.74

618.5

1983

264.3

112,588

11.50

756.1

1984

360.4

120,945

13.00

744.00

1985

434.1

96,580

11.75

1073.8

1986

735.8

85,158

12.00

1384.6

1987

2452.8

145,084

19.20

2409.4

1988

1718.2

116,162

17.60

2709.9

1989

13877.4

96,055

24.60

3620.7

1990

4686.0

89,752

27.70

5953.7

1991

6916.1

110,513

20.80

7410.5

1992

1446.3

75,143

31.20

9437.4

1993

29675.0

75,387

18.32

19735.9

1994

22229.2

72,277

21.00

27379.9

1995

75,940.6

81,730

20.79

27629.5

1996

111,295.0

85,441

20.86

27379.9

1997

110,456.2

85,832

23.32

27629.5

1998

112,563.1

84,727

21.34

26218.2

1999

112,984.0

86,024

27.19

30937.1

2000

114,718.2

85,368

21.55

42988.3

2001

132433.7

85,928

21.34

47475.9

2002

225972.0

85,648

22.47

53457.9

2003

259250.4

130,060

21.61

51955.7

2004

262,177.0

311,119

20.42

54992.0

2005

264,250.1

320,000

19.5

56052.7

Source: CBN Statistical Bulletin, Volume 15, Dec., 2004
               CBN Statistical Bulletin, Volume 16, Dec. 2005
             National Bureau of Statistics Annual Abstract of Statistics 2006
             Federal Republic of Nigeria, Dec. 2006.

NOTE – GDP per capita was gotten by dividing National income by 
              population i.,e  National income         
                                           Population
Methodological Comment


The Ordinary least square (OLS) method as well as the Cochrane Orcutt method was used to estimate the structural parameters of the equation of the model specified in chapter 3. The data used in the analysis are GDP per capita i.e PGDP as the dependent variable, foreign direct investment (FDI), the registered unemployed (RUNEM) and lending rate of interest (LDR) as independent variables.
To understand the result of the regression analysis, there is need to explain some of the statistical indicators or test such as the R2 i.e. coefficient of determination which always range from O to 1 i.e. O<R>1 and it shows how much the change in the dependent variable is caused by the changes in the independent variables. The R2 adjsuted i.e. R-2 complement the role of R2 after taking cognizance of the degree of freedom. The t-values shows how significant the respective parameters of the independent variables impact on the dependent variables. If the calculated t – value is more than the table value of t, we reject the null hypothesis Ho and accept the alternative hypothesis Hi, meaning the parameter of the variable is statistically significant at a given say 5% 1% or 10% as the case may be. The F- test measures the overall significant of the regression model. If the calculated F-value is greater than the table value of F-test we reject the null hypothesis Ho, and accept the alternative hypothesis H1 implying that the whole model is significant.
The Durbin Watson (D.W.) test shows the presence or absence of autocorrelation problem in the regression model.
Below is a model interpretation of the results using the ordinary least squares (OLS) method of estimation.


Equation 1
PGDP  = 25.0964+0.0006356RUEM + 1.1338FDI – 0.069529LDR
              (5.1116)             (1.1363)              (1.8924)         (-0.092971)
R2 = 99.967%                                         R2 = 99.962%
F (3,22) = 22198.8
S.E. of  Regression  = 21.3131
D.W. statistic = 0.93444

 


Interpretation -  (equation 1)
            Using Ordinary Least Square method, the researcher regressed three explanatory variables on the ratio of GDP per capita variable. All the explanatory variable except the lending rate of interest are positively related. The signs of both the Registered unemployed and lending rate of interest do not conform  to apriori expectation.

The parameter estimate of Registered unemployed of 0.0006356 implies that a unit of change in registered unemployed will lead to a change in GDP per capita by 0.0006356. The sign it reflects do not conform to the  apriori expectation because the relationship its has with GDP per capita is inverse and not direct. The sign is meant to be negative in terms of the relationship. This is because once the registered unemployed increases or exist in a country the level of per capita income is zero because there is no source of income.
            Also, Lending rate of interest shows the wrong sign. Lending rate of interest is a major determinant of the level of per capita income. The relationship is positive because the higher the lending rate of interest, the more the inflow of foreign investors wanting to take advantage of the high lending rate of interest. This will spring up lots  of industries which generates employment and contributes positively to the GDP per capita.
            The R2 i.e coefficient of determination of 99.967% is very high implying that about 99% of the systematic variations are accounted for by the three independent variables included R-2 which stand at 99.962%. The F-test is statistically significant at 5%, 10%, 25% levels, while the standard error of the regression is minimized at 21.3131. But the Durbin Watson test of 0.9344 which is less than 2, exhibits the presence of auto correlation problem with the ordinary least square method (OLS).
            The individual t- test shows that all the explanatory variables are statistically insignificant at 5% level. However, foreign direct investment and lending rate of interest was found to be statistically significant at 50 percent level as their t-value of 1.8924 and 1.1363 are greater than t-critical of 0.686, using a two – tail test.
            The foreign direct investment is  indicating a positive sign. This implies that to a great extent, the inflow of foreign direct investment in Nigeria has contributed immensely to her GDP per capita. This is true because employment is generated thus creating sources of income to her citizens.
            Due to this unsatisfactory result we had to re-run regression using the Cochrane-Orcutt this method.


Interpretation -  (equation II)
            Below is a model interpretation of the result using the Cochrane Orcult method of estimation.
PGDP = bo – b1RUNEM + b2FDI b3 LDR + U
PGDP = 21.3887 + 0.0001428 RUEMP + 1.9537 FDI + 1.0907LDR
               (2.9869)       (0.35717)                  (2.49621)          (-1.1171)
R2 = 99.979%              R2 = 99.969%
F(7,14) = 9589.2
S.E. of Regression = 21.1498
D.W. Statistic  = 2.0106


Discussion
            Using the Cochrane Orcut method, the researcher regressed three explanatory variables in the ratio of GDP per capita variables. Two of the signs did not meet the Aprioro Expectation.
The apriori sign for the registered unemployment is expected to be negative but it came out positive. We can accrue this to activities within the second economy. There are lots activities people that are supposed to be unemployed engage in and they are still able to earn a living for themselves e.g. Unregistered and Unrecognized businesses by the government.
            The reason behind the negative sign could be due to the increased level of emigrants. These emigrants engage in activities or jobs that earn them a living. From  these, they send to their family members at home who in turn invest it into one business or the other and then earn a living from such project or investment.

Also, the lending interest rate has a negative sign of which the expected apriori is a positive sign.
            This could be due to activities of domestic investors. Increased interest rate discourages domestic investors from investment. This will thus create unemployment and reduces  per capita income.
            This inverse relationship could be to political instability within the country, coupled with the activities of militants majorly in the Niger-Delta region.
            The R2 i.e coefficient of determination is very high, explaining about 99.979% systematic variation of the equation. This is complemented by the R-2 i.e  adjusted R2 which stand at 99.969%. The F – test is statistically significant at 1% level of significance while the standard error of the regression is minimized at 21.1498.
            The t – value is significant with respect to only foreign direct investment at 5% level of significance while that of lending rate of interest is only significant at 50% level of significance of 2.0106 is better than the Durbin Watson of 1.14754 using the ordinary least squares method.
            With D.W. statistic of 2.0106 it shows the absence of the problem of autocorrelation in the estimation model.
            From the foregoing display of regression result, the Cochrane Orcutt method it only better in the sense that there is absence of autocorrelation problem in the result obtained.
Summary of Findings
            The preference for foreign direct investment, especially for developing countries like Nigeria is informed by several factors.
            First, Nigeria as a country is advised to rely on non-debt development financing sources if she wants to achieve the type of growth recorded by the developed countries. Secondly, because of low per capita income and adverse terms of trade, Nigeria cannot attain the desired level of gross national savings to achieve a reasonable level of sustainable growth. Hence, there is need for adequate  foreign direct investment to achieve meaningful growth. It is on this basis that the research carried out an analysis of the impact foreign direct investment has over reduction in the poverty level of Nigerians.
            The summary of findings includes:
The result or the analysis obtained so far showed that the model adopted in the study as well as the data employed were appropriate in explaining the relationship between foreign direct investment activities and alleviation of poverty as represented by the variables of foreign direct investment and GDP per capita.
From the theoretical review, with respect to the OLI paradigm on theories of foreign direct investment, their activities have been greatly felt by Nigerians. Although some dissatisfaction arises from residents in their area of operation.

Recommendations
In Nigeria, to reap the full benefits of foreign direct investment, the following matters.
Foreign investors are influenced by three broad groups of factors: the expected profitability of individual projects, the ease with which subsidiaries operations in a given country can be integrated in the investor’s global strategies and the overall quality of the host country’s enabling environment.
            Thus, the Nigerian government should provide an enabling business environment because it is vital in attracting international investment. The following should be provided:

  • Improvements of general macroeconomic and institutional frameworks.
  • Creation of a regulatory environment that is conducive to inward  foreign direct investment.
  • And upgrading of infrastructure, technology and human competences to the level where the full potential benefits of foreign corporate presence can be realized.

 The revenue fortune accruable to the Federal Government by way of taxes paid by foreign direct investors should be directed to productive activities in the real sector of the economy especially the agricultural sector, a major employer of manpower and occupation of the dominant rural sector in Nigeria.
Foreign direct investors should contribute more to community development by building more infrastructural facilities such as roads, electricity, water etc in their areas of operation in order to have a positive corporate social responsibility and  a favourable environment for operation.
The federal government should make efforts to encourage FDI in non-oil sectors of the economy where the benefits of FDI can support broader economic development as well as fulfil the business desires of the investors.

Conclusion
The main conclusion that can be drawn from the study is that the economic benefits of FDI are real. FDI enables Nigeria as a country achieve the higher growth rates that generally emanate from a faster pace of gross fixed capital formation which in turn reduces poverty level.
Nigeria is not an exception in Sub-Saharan Africa which has FDI inflows bolstered significantly by natural resources. This research work clearly showed that foreign direct investment often raise wages. FDI thus help improve income growth in a low wage country like Nigeria.
If the proper conducive environment is provided to attract more capital inflow then the benefits form the activities of FDI leads to a higher rate of growth and significant reduction.

References
Adeyeye, and Ajakaye (2001):   The Nature of Poverty in Nigeria, Technical Report. NISER, Ibadan.

ADB (2000), Assessment of Poverty in IndonesiaManila, Asian Development Bank.
Balasubramayan et al (1996), Foreign Direct and Growth in Countries”

Bhorat et al (2003) “Employment and Household Property:  The effect of Trade, Investment and Technology in South Africa” Discussion paper No. 14 Global  Poverty, Development Policy Research Unit, University of Cape Town.

Blomstrom and Magnus (1990), Transnational Corporations and Manufacturing Export from Development Countries, New York, Center on Transnational Corporations.

Borenztein et al (1998),  How does Foreign Direct Investment Affect Economic Growth? Journal of International Economics No. 45.

Chris E. N. (1997).  Structural Adjustment Issues in Nigeria.

Cockcroft and Ridell (1991). Foreign Direct Investment in Sub-Saharan AfricaWorld Bank Working paper 619.

Hernandez – Cata, E. (2000) “Raising Growth and Investment in Sub-Saharan Africa. What can be done? IMF Policy Discussion paper PDP 004.

Glass and Kamai (1999) “Multinational firms and Technology Transfer”. World Bank Policy Research Working paper No. 2067

Improving one quality of Life in our Communities, ( 2006) MTN Foundation,

Jenkns et al (2002). Foreign Investment in Southern Africa :Determinates Characteristics and Implications for Economic Growth and Poverty Alleviation“ Final Report, October,  Globalization and poverty project, Centre for the study of African Economics, University of oxford.

Jingan, M.L. (1997):  The Economic of Development and Planning, Delhi:Vrinda Publication Ltd.

Levine and Renect (1992) A sensitivity Analysis of Cross Country Growth Regressions”, American Economic Review, 82 (4).

Mayne, K. (1997).  The OECD Multilateral Agreement on Investment (MAI), Oxford .

Morisst, J. (2000),  “Foreign Direct Investment in Africa, Policies and Matters”, World Bank working paper.

Moses, M.I. (2003): Foreign Direct Investment, Technology transfer and poverty alleviation Africa’s hope and Dilemma. ATPS Special paper series no 16

MTN Nigeria Communications Limited Corporate Profile, ( 2001) Connecting and empowering Nigeria.

Odenthal, N. (2001), “FDI in Sub-Africa”. Technical paper no. 173, OECD Development centre.

Obadan,M.I. (2004): Financing Development, Foreign Borrowing and Investment versus Domestic Sources, Ibadan: NCEMA

OECD (2002),  Foreign Direct Investment for Development Maximizing Benefits, Maximizing Cost Overview, Paris – OECD publication.

Savannahmuttoo, N. (1999),  “Foreign Direct Investment and Poverty reduction in developing countries, “Turn Course solutions,Canadian International Development Agency.

Servan, L. (1996).  “Irreversibility, Uncertainty and Private Investment Analytical issues and some lessons for Africa”, World Bank Working paper.

United National Development Porgramme (1990) Human development, Foreign Borrowing and Investment versus Domestic sources.

Unilever Nig. Plc. (2000):  Director’s Speech During the Annual General Meeting.

UNCTAD (2003), World Investment Report, Geneva, United Nations

UNCTAD (2004),  World Investment Report Geneva, United Nations.

World Bank (1990):  “World Development Report, .

World Bank (2003):  World Development Report, 2003, Washington, DC.
Yello: (2007). An External Publication of MTN Nigeria Communications Limited vol. January 2007.

Yellowtimes: (2006) A Quarterly Publication of MTN Nigeria Communications Limited Vol. No 1 April – June