Abstract

This study sets out to examine the role of manufacturing sector Foreign Direct Investment (FDI) in the quest for export sector diversification in Nigeria for sustainable development. This objective was achieved by estimating the effects of manufacturing sector FDI on manufactured goods export from Nigeria using the Autoregressive Distributed Lag estimating technique. The study discovered that FDI inflows into the country’s manufacturing sector impacted negatively on manufactured exports in the short run. The short run result nevertheless gave way to a positive and significant influence of FDI on manufactured exports in the long run, indicating that this form of foreign capital is important for manufactured export promotion in Nigeria. The resulting long run positive FDI- spillovers on export performance in Nigeria is in tandem with the neoliberal theoretical viewpoint that developing countries can rely on FDI as ladder to sustainable development. The findings suggest that sustainable development can be enhanced in Nigeria by exploiting the channel of positive spillovers from sector specific FDI inflows. The study concludes that with appropriate policy stance, one important way of pursuing the long run goal of sustainable development is to route FDI inflows in the direction of the country’s manufacturing sector.

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