The Reconciliation of Neoclassical Economic Theory and The Dependency Theory of Foreign Direct Investment Using Disaggregated Economy: The Case of Nigeria

This study attempts to reconcile the dependency and the neo-economic theories of foreign direct investment using Nigeria as a case study. In doing so, the effect of foreign direct investment in output growth in agricultural/fishery, manufacturing/processing and mining/quarrying sectors is investigated. The long run results confirm the view of the neo-economic theory while the short run results (Granger causality) impulse response especially in the manufacturing/processing sector suggests that policies influence the impact of foreign direct investment on economic growth which confirms the view of the dependency theory. This shows that both the theories are correct in their assertions through the unseen hand of policies. All the vector error correction results support the co-integration results and the diagnostic results suggest that all the results are not spurious.