Institutional Quality and Trade Openness as Drivers of Foreign Direct Investment in Emerging Economies: Evidence from Nigeria
Sr No:
Page No:
30-38
Language:
English
Authors:
Ettah Bassey Essien Ph.D , Ndubuisi Eme Uguru*
Received:
2025-08-14
Accepted:
2025-11-11
Published Date:
2025-11-20
Abstract:
The in host economies quality of institutions is critical in shaping FDI flows, influencing mutually volume and all the
benefits from such inflows to the receiving economy. The study probed into the specific connections between FDI, trade openness and
quality of institutions in Nigeria relying on autoregressive distributed lag in a quantile model framework (QARDL) as the base for
analysis. On the pedestal of empirical analysis, FDI reinforced itself across all quantiles, indicating a consistent momentum effect,
with significant impact at various mid-to-upper quantiles. Control of corruption in general positively reinforces FDI, although it turns
dismal at certain higher quantiles, suggesting unstable and varying investors’ reactions to levels of corruption. Political stability
negatively affects FDI at lower quantiles but positively influences it from the mid to upper ranges. Regulatory quality mostly shows a
negative effect on FDI except at certain higher quantiles. Trade openness support FDI inflow across all quantiles but with diminishing
impact at higher quantiles. This study recommends that to attracting and sustaining FDI, Nigeria should implement more robust anticorruption policies and enhance institutional governance. This includes increasing transparency, reinforcing the rule of law, and
ensuring consistent regulatory practices. By minimizing corruption and creating a reliable business environment, Nigeria can improve
investor confidence and encourage stable, long-term investments.
Keywords:
foreign direct investment, trade openness, institutional quality.JEL Classification: C32, C52, E22, F21