The Impact of Foreign Direct Investment on Nigeria Economic Growth

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CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Industrialization has not only changed the way the world do business but also changed the world itself. Fortunately, Nigeria is one of the countries that did not escape its impact. Industrialization is the process of social and economic change that transforms a human group from a pre-industrial society into an industrial one. It is a part of a wider modernization process, where social change and economic development are closely related with technological innovation, particularly with the development of large scale energy and metallurgy production. It is the extensive organization of an economy for the purpose of manufacturing. Industrialization also introduces a form of philosophical change where people obtain a different attitude towards their perception of nature and a sociological process of ubiquitous rationalization. The key positive factors identified by researchers that is facilitating industrial modernization and enterprise development have ranged from favourable political-legal environment for industry and commerce through abundant natural resources of various kinds, to plentiful supplies of relatively low cost, skilled and adaptable labour. During the process of industrialization level of income per person (per capita income) rises and productivity level increases, there is wide spread replacement of manual labour by machines and this began in great Britain in the 18th century and is still continuing in some parts of the world. This process was the result of many fundamental interrelated changes that transformed agricultural economies into industrial ones. The most immediate changes were the nature of production; what was produced as well as where and how. Studies of countries in Africa, Latin America, the Caribbean, the Middle East and the rest of Asia in the late 20th century found that high levels of structural differentiation, functional specialization and autonomy of economic systems from government were likely to contribute greatly to industrial- commercial growth and prosperity. Amongst other things, relatively open trading system with zero or low duties on goods imports tended to stimulate industrial cost-efficiency and innovation across the board. Free and flexible labour and other markets also helped raise general business-economic performance levels, as did rapid popular learning capabilities. Furthermore, positive work ethics in populations at large combined with skills in quickly utilizing new technologies and scientific discoveries were likely to boost production and income levels, and as the latter rose, markets for consumer goods and services of all kinds tended to expand and provide a further stimulus to industrial investment and economic growth. By the end of the century, East Asia was one of the most economically successful regions of the world with free market countries such as Hong Kong being widely seen as models for other less developed countries around to emulate. Planned industrial development in Nigeria did not really commence until Nigeria was at the threshold of independence. Economic activity before independence was almost wholly commercial since the role of the colonies was production of raw materials and consumers of finished industrial goods. Naturally therefore, the early effort of industrialization was to foster the substitution of locally produced goods for imported ones. This import substitution strategy was a dominant feature of the Nigeria efforts. The industrial policy and objective of Nigerian government emphasized that the direction of action in its industrial sector shall be to encourage and promote directly and indirectly the rapid development of manufacturing and allied activities as a major factor in the overall prosperity of the nation, this will also create positive input into the attainment of vital social goods. The major objective of the Nigerian government policy has been to achieve an accelerated pace of...
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