INTERNATIONAL DIRECT CAPITAL MOVEMENT: WHAT GRAVITATES THE FLOW INTO NIGERIA?

*In emerging economies, domestic capital is highly inadequate, due to pervasive poverty and low capital formation, as a result of which external borrowings are often contracted. Important as they are, foreign loans are dangerous peels, particularly when they are contracted under veiy tight terms and conditions. Emerging, nations, Nigeria inclusive, often resort to seeking the more friendly opportunities in international capital movements as direct foreign investment (DFI). Previous studies provide insights into some determinants of DF1 flow into Nigeria, leading evidence to support the role of key macro-economic variables. Unfortunately, the studies fail to examine the role of external debt and infrastructural development in gravitating DFI into Nigeria. This limitation forms the core problem of this study. The key objective of the study is to determine the significance or otherwise of external debt and aggregate capital expenditure, in attracting DFI into Nigeria during the study period, 2006- 2015. Dunning (1973) 's reconciliatory Eclectic Location-Specific Theory is adopted. Employing secondary data from the Central Bank of Nigeria, the study engages the Ordinary Least Squares statistical method and finds among others, that a positive and significant relationship exists between DFI and external debt; while a positive but insignificant relationship exists between DFI and aggregate capital expenditure. It is therefore recommended that public external debt should be judiciously utilized to augment domestic resources, so as to increase finding for massive infrastructural development in Nigeria, to gravitate DFI into the country.