Nigeria has always managed to attract foreign direct investment despite its poor economic outlook. This is thanks to its oil reserves and the consumption potential of its large population.
Economists have looked at a range of factors that contribute to a drop in foreign direct investment. These include institutional underdevelopment, property rights and country regulations. A slow unravelling There have been drastic changes in the quality of Nigeria’s institutions over time. This goes as far back as pre-independence.
The study found no evidence of a long-run relationship between any of the institutional variables and foreign direct investment. Surprisingly, freehold property rights did not play a significant role. Evidence generally points in the direction of secure property rights attracting investment, because multinational companies feel better protected and commercial farmers can make long-term plans. Examples include China and Zimbabwe.
An even more interesting result was the significant role that the right to manage property played in attracting investment to Nigeria. This shows that while freehold property rights as a whole may not have a significant impact on investment in the immediate term, certain aspects of freehold property rights, such as the right to manage, are still important.
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