AN EMPIRICAL ANALYSIS OF ENVIRONMENTAL IMPACT OF FOREIGN DIRECT INVESTMENT IN THE MINING SECTOR IN NIGERIA
This study attempted to estimate the environmental impact of Foreign Direct Investment in the mining sector in Nigeria. It is argued that only those countries that have reached a certain income level can absorb new technologies and benefit from technology diffusion, and thus reap the extra advantages that FDI can offer. The mining industry in Nigeria is dominated by oil. Indeed, Nigeria is the largest producer of this commodity in Africa and sixth largest producers in the world. This research study makes use of secondary data. The variables used are the Foreign Direct Investment (FDI), gross domestic product (GDP), output of mining industry and per capital flight (KF). This study covers a period of 31 years that spans between …show more content…
1.1 Statement of the Problem
The mining industry has traditionally been a major recipient of foreign direct investment in sub- Saharan Africa (Nigeria inclusive), and has commonly been an important foreign exchange earner for the region. Over the forty years to the present, Africa’s share by value of world mining output declined from 23% to 10%, as a result of poor policies, political interference and lack of investment (Allaoua and Atkin, 2003). This decline can be attributed to lack of investment in systematic geological mapping, poor technical data on mineral endowment, weak institutions and policies, poor infrastructure, the lack of cheap and reliable energy resources, deteriorating commodity prices, poor investment climates and the scarcity of indigenous technical and professional manpower (Quashie, 2006).
The flows of FDI to sub-Saharan Africa have traditionally been to oil and natural resources (Allaoua and Atkin, 2003; Morisset, 2000), although there has been a trend in recent years to invest in services and manufacturing (UNCTAD, 1999). For example, 75% of FDI in Africa in the period 1999-2002 was concentrated in the mining and oil extraction industries (Allaoua and Atkin, 2003). FDI to sub-Saharan Africa tends to