This study examines the impact of political risk, infrastructure quality, market size, and policy incentives on foreign direct investment (FDI) inflows in Nigeria, while controlling for demographic, macroeconomic, institutional, global, and infrastructural factors. Drawing on eclectic paradigm theory, institutional theory, and the resource-based view, the study employs a cross-sectional regression framework using secondary data spanning 1990–2022. The empirical results reveal that political risk exerts a significant negative influence on FDI inflows, confirming that governance uncertainty constitutes a fundamental deterrent to cross-border capital allocation. Infrastructure quality emerges as a strong and statistically significant positive determinant of FDI, underscoring its role as a critical complement to investment decisions by multinational corporations. Market size, proxied by GDP per capita, and policy incentives, measured through trade openness and tax concession indices, both demonstrate positive and significant associations with FDI. Among the control variables, institutional quality and global commodity price dynamics exhibit notable explanatory power. Post-estimation diagnostics confirm the robustness and reliability of the estimated model. These findings carry important implications for policymakers, particularly in sub-Saharan Africa, where FDI is urgently needed to bridge infrastructure deficits, generate employment, and stimulate inclusive growth. The study recommends sustained improvements in political governance, accelerated infrastructure development, and the design of coherent, transparent, and investor-friendly policy regimes as essential prerequisites for attracting and retaining sustainable FDI flows.
Onipe Adabenege Yahaya (Fri,) studied this question.
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