Essays on industry linkages and foreign direct investment : evidence from Nigeria

Ojaleye, E 2018, Essays on industry linkages and foreign direct investment : evidence from Nigeria , PhD thesis, University of Salford.

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This thesis is based on an econometric investigation of the relationship between industry linkages and Foreign Direct Investment in Nigeria. Unique data obtained from a survey of Nigerian firms conducted by the World Bank Enterprise Survey Department was employed for the estimations based on manufacturing and service firms. This study also constructed an input-output table to measure both horizontal and vertical linkages. This study is divided into four parts.

Firstly, the study investigated spill-over effects from FDI to domestic firms through horizontal and vertical linkages using the augmented Cobb-Douglas models as well as the Ordinary Least Square and Fixed Effect techniques. The results of the estimation show evidence of the positive effects of foreign presence on domestic firms and the presence of large technology gaps. Also, the results indicate that there is a productivity spill-over in both horizontal and vertical linkages. Firms with technology level below its foreign competitors tend to benefit from the technology brought by FDI.

Secondly, the study investigates Nigerian innovative outcomes of domestic firms’ performance by using the Crepon Duget Mairesse model coupled with augmented Cobb- Douglas function. The result showed that firm-level innovation activity in Nigeria appears to be high and even larger than in similar countries around the region, but the extent of innovativeness is low and incremental. This suggests that in contrast with OECD countries, some of the innovations implemented are so minor, or are based on imitation, to the extent that they do not have a significant impact on productivity (survival innovation).

Thirdly, the study theoretically and empirically investigates the impact of Export-platform FDI on backward linkages; by doing this, a three-country model is developed and tested. The results from the various hypotheses tested indicate that there is a significant relationship between FDI and backward linkages in Nigeria; and the role of the trade agreement, local content requirement and market size is very critical for spill-overs and productivity.

Lastly, the study also looks at how FDI loosens the financial constraints of domestic firms through the use of the Euler framework, and the consideration of the industry linkages. The results show that private domestic firms do have financing constraints and the flow of inward FDI alleviates the financing constraints by signalling. This study provides new evidence on the relationship between industry linkages and FDI in Nigeria.

Item Type: Thesis (PhD)
Contributors: Sorwar, G (Supervisor)
Schools: Schools > Salford Business School
Depositing User: Dayo Ojaleye
Date Deposited: 02 Oct 2018 14:53
Last Modified: 27 Aug 2021 21:13

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