VECTOR ERROR CORRECTION ANALYSIS OF MULTINATIONAL CORPORATIONS’ INVESTMENTS AND PERFORMANCE OF NIGERIAN ECONOMY.

Abstract

The effect of investments made by MNCs using vector error correction on the Nigerian economy's performance from 1998 to 2024 is the focus of this research. The CBN Statistical Bulletin is the primary source for the secondary data used in this ex-post facto procedure, 2024. With GDP serving as the dependent variable, we can see how well the Nigerian economy is doing. Using the construction, oil and gas, and communication sectors as explanatory variables, we may quantify the investments made by multinational firms. Time series econometric methods are used to create and test hypotheses. According to the results, the variables are stationarity-indicating since they do not have unit roots. The investments made by multinational firms and the success of the Nigerian economy are in a state of long-run equilibrium. The findings show that any long-run imbalance may be corrected with a short-run adjustment speed of about 74%. Multinational firms' investments in Nigeria have a direct impact on the country's economic growth. According to the coefficient of determination (R²), changes in the investment characteristics of multinational corporations explain roughly 62% of the variance in the performance of the Nigerian economy. The paper emphasises the strong correlation between foreign direct investment and the expansion of the Nigerian economy. It suggests that MNCs help the host country out by building and maintaining vital infrastructure. In order to foster productive partnerships, the government should make sure that these companies put some of their earnings back into the growth of the areas where they have set up shop. In addition, MNCs should be closely watched by federal environmental protection authorities to ensure they don't break any laws or regulations that are already in place.