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Foreign Capital Inflows and Unemployment in Nigeria: A New Evidence from ARDL-Bounds Testing Approach

Onyinye I. Anthony-Orji


Anthony- Orji


Jonathan E. Ogbuabor


Emmanuel O. Nwosu

Onyinye I. Anthony-Orji 1 Anthony- Orji 1 ,
Jonathan E. Ogbuabor 1 Emmanuel O. Nwosu 1 

  1. Department of Economics, University of Nigeria, Nsukka 1

Pages: 176-188

DOI: 10.18488/journal.62.2018.56.176.188

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Article History:

Received: 16 August, 2018
Revised: 20 September, 2018
Accepted: 23 October, 2018
Published: 26 November, 2018


Using a novel approach, this study disaggregates and estimates the impact of foreign capital inflows on unemployment in Nigeria by adopting the Auto-Regressive Distributed Lag- Unrestricted Error Correction Methodology (ARDL-UECM). The ARDL-bounds test co-integration results show evidence of co-integration between disaggregated Foreign Capital Inflow variables (such as Foreign Direct Investment, Foreign Portfolio Investment and Remittances) and unemployment rate in Nigeria within the period from 1977Q1 – 2013Q4. The empirical results also show that foreign direct investment, foreign private investment and trade openness have negative impact on unemployment rate. On the other hand and interestingly, remittances and real exchange rate show a positive impact. The study therefore recommends the routing of remittances through the banking channels which would help in allocating remittances and other financial flows to productive uses. Again, government should enact investor-friendly policies and build conducive business environment in order to attract more Foreign Capital Inflows which will support job creation for the teeming population and thereby reduce biting unemployment.
Contribution/ Originality
This study contributes to the existing literature by adopting the Auto-Regressive Distributed Lag- Unrestricted Error Correction Methodology (ARDL-UECM) in estimating the impact of disaggregated foreign capital inflows on unemployment in Nigeria.


ARDL, Foreign capital inflows, FDI, Foreign private investment, Remittances, Unemployment



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This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.


All authors contributed equally to the conception and design of the study.

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