Foreign Direct Investment and Price Stability in Nigeria

This study investigated the impact of foreign direct investment (FDI) on price stability in Nigeria from 1990 to 2024. Specifically, it assessed how foreign direct investment inflows, trade openness, and exchange rate affect price stability, measured through consumer price index. Annual time series data were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and the World Bank’s World Development Indicators (WDI) to achieve these objectives. The study used the ARDL technique for analysis. The findings revealed that, foreign direct investment exerts a negative and statistically significant influence on the consumer price index in Nigeria, trade openness has a negative and significant impact on the consumer price index, while the exchange rate shows a positive and insignificant effect on the consumer price index. Based on these results, the study concluded that, FDI contributes to the maintenance of price stability in Nigeria. It was recommended that, the government should ensure a stable macroeconomic and regulatory environment to attract long-term FDI, particularly in productive sectors such as manufacturing, agriculture, and renewable energy. Enhancing domestic production and reducing import dependence through such investments would expand supply capacity, ease inflationary pressures, and strengthen overall price stability