Example Of Dissertation On The Patterns Of Foreign Direct Investment In Telecommunication In Nigeria
Type of paper: Dissertation
Topic: Information, Telecommunications, Politics, Nigeria, Economics, Finance, Investment, Industry
The Patterns of Foreign Direct Investment in Telecommunication in Nigeria
Foreign Direct Investment (FDI) refers to the input of capital resources into the economy of another country to boost economic performance. Nigeria had an issue in its telecommunication sector because of the inability to meet the growing demands on its resources. Foreign investors took advantage of the opportunity and set foot into the Nigerian market. the importance of FDI in one sector of the country’s economy is important because of the contribution it made to the whole economy.
Research requires careful selection of the methods of data collection and analysis to derive meaningful conclusions from the information collected. Researchers must be keen and selective when it comes to the sources of data. The nature of the research often dictates the research design given that some information cannot be derived from primary sources of data. At the same time, secondary sources of data may be biased and give wrongful information in certain cases. Most research involving historical information over a long period may necessitate and favor the use of secondary sources due to the lack of respondents and compromised accuracy of the information from the respondents. In this study, the required information is historical in its context as it monitors the past performance of FDI in Nigeria’s telecommunication sector over the last twenty years.
The use of SPSS analysis and regression analysis indicated that other sectors of the Nigerian economy grew because of the inflow of FDI in the telecommunication sector. These include industries such as building and construction and trade. The study concludes that Nigeria is an exemplary nation in terms of utilizing FDI and encourages the government to foster the same in other industries such as oil processing.
Chapter 3: Methodology
When most researchers design pieces of research, their objective is to address particular questions posed in the same field of study. Before they begin, the researchers must decide the nature and type of data required in the study. Deciding the type of data required in the study was elemental because it provided an opportunity for the development of research objectives, the formulation of assumptions, the drawing of the research hypotheses, and identifying possible limitations of the study. The type of data required in the study would be quantitative data, qualitative data, or both. As such, prior to the identification or choosing of the type of data, that would be used in the study; there was an analysis of the significance of each of these types to the study. The significance encompassed elements such as the influence of the type of in terms of its effectiveness in answering the research questions. The analysis of the effectiveness included an evaluation of the reliability and validity of the type of data on the foreign investment data (Nkechi & Okezie, 2013, p. 3).
Second, the identification of the type of data to use in the research involved an analysis of the costs of using the type of data in terms of its presentation. Presentation of the data on the foreign direct investments would require both complex and simple methods to ensure easy understanding of the findings. During the study, the chosen type of data was incorporated into the regression analysis using the collected data on the foreign direct investment data using the SPSS. During the research, acquiring the data required may necessitate the use of a certain technique, which may be the use of interviews, questionnaires, observation or an analysis of secondary data gathered by previous researchers interested in the same nature of research.
The choice of a particular method of data collection and its eventual analysis often reflects the final decision undertaken on the design of the research. The selected method should enhance the accuracy level of the data collection and nay derived results that may emanate from further analysis of the data. However, there is an acceptable level of accuracy when it comes to the data analyzed because the mechanism of data collection may lead to some mistakes especially when recording the data. For this reason, the core of the research design needs to consider the use of a research onion in the development and the decision to use a particular design in the research. When selecting the research design, it is important to consider the core elements or objectives of the research and the relationship they have with the rest of the elements of the research design, which are in the outer layers of the research onion. In spite of their little importance, similar to the outer rings of a real onion, researchers should not disregard the role they can play in the relevance of the conclusions they derive from the data they analyze.
In this research, the methodology selected is the acquisition of data from secondary sources of data due to the nature of the research involved. The patterns of foreign direct investment in the telecommunication industry in Nigeria over the stated number of years is historical data. The country has few respondents who can provide accurate data over such a long period (Izuchukwu & Ofori, 2014, p. 3). As such, the qualitative aspect of the data, as suggested by the research onion, requires that the research design will utilize secondary sources of data. Such data is accessible in reliable records and sources such as government reports, research reports, and published books and journals. The research design aims at deriving specific conclusions and figures about the inflow of FDI into the Nigerian telecommunication. The results are specific, and they require credible sources of information that do not encourage generalizations.
SPSS was selected for the analysis of data and deriving the conclusions made about the telecommunication sector in Nigeria. SPSS refers to a comprehensive and flexible method of analyzing statistical data. It also offers all solution for the management of data in cases where the data acquired is too much. For instance, the range of data in this research extends over a period of twenty years. It calls for good data management to ensure that the researchers present relevant data in connection to the telecommunication industry. A good example of such efficient data management is the industries presented in the table. All of them suffered some effects because of the FDI changes that occurred within the market in Nigeria.
The collection of data from the secondary sources was essential because it facilitated the development of the research by acting as background information for the study (Nkechi & Okezie, 2013, p. 4). That is; the secondary information was the basis on which the analysis of data on foreign direct investment in the telecommunication industry in Nigeria was conducted. The SPSS was chosen for its advantages of the research study. First, the analysis method would allow for effective management of the data. The SPSS would quicken the data analysis because it would allow for easy location of the variables and cases.
The SPSS would also allow for a wide range of options such as charts, methods and graphs. This wide range of options would allow for drawing of comparisons in the rate of foreign direct investments in different telecommunication companies in Nigeria. The wide range of options would also allow for the formulation of different variables, which would facilitate finding and analysis of the results. Third, the SPSS would allow for better organization of the output, which would in turn allow for effective analysis of the data collected during the research. As such, the research methodology was systemic and followed a logical organization of data planning, collection and analysis. The use of SPSS enables the manipulation of various forms of data into tables and charts that can present make meaning to any user (Scott, 2013, p. 4). The charts can be presented in the form of plotted trends and distributions. SPSS is also suitable for the telecommunication industry analysis because it is usable on modern platforms such as Windows and Macintosh.
Chapter 4: Data Collection and Analysis
A clear theoretical model on the SPSS analysis of the FDI in Telecommunication in Nigeria reflects at the several methods that are applied to the overall process of analyzing the effect of FDI inflow on the viewed economy. The major determinants of the output growth in the country are the major capital stock, the labor as well as the factor productivity. The functional model is formulated from the main determinants to create an SPSS analysis.
The SPSS analysis model of the FDI in Telecommunication in Nigeria involves the capital stock bearing two components of the human capital (Hc) as and the physical capital (Pc).
K= (Hc, Pc)
Y= (Hc β Pc β2 (A.L) 1-β1)
Y= output, PC= the physical capital, Hc=Human capital, L=The labor force, and A= The existing level of technology within the FDI telecommunication system.
Y = (Hcd +Pcpf) β1Khβ2 (A.L) 1-β1-β2
Assuming the labor to be constant with respect to the output variable:
Y = [(Hcd + Pcf) β1Khβ2]A1/ (1-β1-β2)
Taking the logarithm of the fourth equation,
Log Y= β1/ (1-β1-β2) LogHcd + β1/(1-β1-β2)LogPcf + β1/(1-β1-β2)LogPc +Log A.
Let β1/(1-β1-β2) for Hcd = a1, β1/(1-β1-β2) for Pcf = a2, β1/(1-β1-β2) for Kh = a3 and LogA = a0.
Assuming the technology variable to be constant,
Log Y = a0 + a1LogKpd + a2LogKpf + a3LogKh + et = 0
In this case, the et is considered as the residual term of the entire function.
a0> 0, a1 > 0, a2 > 0 and a3 > 0
For the analysis of the FDI in Telecommunication in Nigeria’s case study, a clear show of the impact of inflow of the FDI on the economic development between the years 1991-2009 is reflected through the ordinary least square multiple regressions. The system in most cases can be assisted by the statistical software referred to as the Statistical Package for Social Science (SPSS). The overlying regression model for the analysis of the FDI in Telecommunication in Nigeria is well reflected as:
Yt = MAPt, BACt, TACt, TABSt, Ut.
Yt= β0 + β1 MAPt+ β2 BACt+ β3 TACt+ β4 TABSt
In the case of the FDI in Telecommunication in Nigeria, Yt is taken as the GDP for the current factor cost within the country. MAPt in this case is considered as the FDI manufacturing and processing sector of Nigeria, BACt is considered as the FDI building and construction sector, and the TACt is finally seen as the FDI from the sectors of transport and telecommunication. On the other hand, TABStis considered as the FDI from business service and trading sectors of the Nigerian economy. Presenting the information in a symbolic manner, it can be said that:
Yt= F(MAPt, BACt, TACt, TABSt), where Yt is an dependent variable and all other factors in the equation are independent variables.
The table below shows the resulting figures in millions of the gross domestic product at the current price as at the years the data was taken. The growth of the gross domestic product resulted from the sources of foreign direct investment in various industries within the economy, which have a relationship with the inflow of FDI into the telecommunication sector within the economy. The values in the table represent the dependent and the independent variables that affect the industry. The resultant figure is the output realized by the industry, which contributes to the overall performance of the gross domestic product.
The independent variables in the industry refer to factors beyond the control of the stakeholders. They are not in a position to regulate their effects and they must formulate policies and implement them within a short period to ensure that they conform to the industry conditions.
Data retrieved from IMPACT OF FDI ON ECONOMIC DEVELOPMENT OF NIGERIA | Mustapha Hussein - Academia.edu. (n.d.). Retrieved from http://www.academia.edu/3698728/IMPACT_OF_FDI_ON_ECONOMIC_DEVELOPMENT_OF_NIGERIA
A clear look at the coefficients of the relationship between the GDP, the private investment in telecommunication, and the general telecommunication contribution to the GDP is reflected through the table indicated.
Data retrieved from: IMPACT OF FDI ON ECONOMIC DEVELOPMENT OF NIGERIA | Mustapha Hussein - Academia.edu. (n.d.). Retrieved from http://www.academia.edu/3698728/IMPACT_OF_FDI_ON_ECONOMIC_DEVELOPMENT_OF_NIGERIA
Analysis methods varied and the reliability of the method of analysis to consider for the study was evaluated prior to the choosing. The methods evaluated included the ordered logistic regression, the OLS regression, the ANOVA, the multinomial regression of logistics, and the ordered prohibit regressing. All these SPSS analysis methods would be elemental for the analysis of data on the foreign direct investment in the telecommunication industry in Nigeria.
One of the underlying assumptions of the regression employed in this data analysis is that the existent relationship between the every pair of the groups of the outcome is similar. That is, it is assumed that the coefficients describing the between the lowest and all the higher categories of the variables of the response are similar to those coefficients describing the relationship between the following lowest category and all the higher categories. This element is referred to as the assumption of parallel regression or proportional odds. Since the existent relationship between all the pairs of the groups in the data on foreign direct investment in the telecommunication industry in Nigeria is similar, there is only a single set of the coefficients. If the relationship between the groups were not the same, there would the need to describe the relationships between every pair of the groups of the outcomes using different models. The assumption of proportional odds was tested, and the null hypothesis for the test formulated. The hypothesis was that the there is no distinct or considerable difference in coefficients between the models. As such, non-significant results are anticipated ("IMPACT OF FDI ON ECONOMIC DEVELOPMENT OF NIGERIA | Mustapha Hussein - Academia.edu," n.d. 2015, p. 7)
Conclusions and recommendations
The research study utilized data from the Central Bank of Nigeria (CBN) and the World Bank development Indicator information. It is a national level type of data, which enables the empirical analysis of the socio-economic effects of the patterns of FDI in the telecommunication industry in Nigeria. The data analyzed was sampled over a two-decade period beginning from 1991 to 2010. The results derived from the research showed the relationship between the inflow of FDI into the telecommunication sector and related it to the rest of the economy. It asserted the earlier proposal that investments in the telecommunication sector resulted in positive effects on the Nigerian economy. Most of the studies in this sector often focuses on the developed nations although they often conduct cross-country studies in rare cases (Izuchukwu & Ofori, 2014, p. 8). It is important to note that the conclusions drawn from the developed nations are similar to the results derived from the Nigerian case. The results affirmed that an increase in foreign direct investment is a driving factor for the growth of the economy.
As changes occur in the level of FDI in the telecommunication sector similar or inverse changes can be perceived in other industries meaning that telecommunication provides an opportunity for the development of other industries in the same economic cycle. Primarily, the researchers conclude that the growth of foreign direct investment in the telecommunication sector is a necessary condition but it is insufficient for the sustenance of economic growth. The government needs to encourage the growth of FDI in other sectors to ensure balanced growth and over-reliance of income from one sector of the economy. Similar advancements will accrue to other sectors of the Nigerian economy if they allow FDI. The first step towards maximizing on FDI is the removal of trade barrier by the government to allow foreign firms and local firms to compete for resources and market segments within the same economy. However, there is little private investment in the telecommunication industry, which calls for the privatization of the sector to allow maximum competition and utility of consumption (Scott, 2013, p. 8). The policies implemented to govern FDI should be stable and transparent such that the do not promote particular political interests. The country should be ready to face challenges associated with increasing levels of FDI such as the fall of some of the local industries and the repatriation of profits to the home countries of the foreign companies. However, the advantages of FDI in telecommunication outweigh the expected challenges. It is a major contributor to economic growth.
The most vibrant economic sector in Nigeria is the oil industry. Having witnessed the effects of foreign direct investment in the telecommunication industry, the government should take similar steps to implement the same measures in the oil sector. A regression analysis of the inflow of FDI into the economy shows that it has a positive effect that leads to the growth of other sectors. If similar circumstances accrue to the oil sector, it implies that more sectors of the economy will witness significant growth because the oil sector relates to more sectors of the economy. Most importantly, it will provide opportunities for the reduction of the rate of unemployment, which currently stands at an approximate 30 percent.
Several challenges face the inflow of FDI into all the industries in the Nigerian market. Today, the country is riddled with several incidences of insecurity. Anti-government movements jeopardize the operations of the government as it struggles to attract foreign investors into the country. In the analysis, there are rapid drops in the rates of inflow in the industries. Such significant drops may be a result of stringent political conditions and implementation of restrictive policies that limit the influx of FDI into the Nigerian market. The government and other stakeholders need to assess such policies and abolish them to allow a free market economy that fosters investment from other countries. Developing nations also have high levels of illiteracy. The low levels of literacy result in inadequate skilled labor within the market, which forces most of the foreign companies to hire labor from their home countries. As they set foot in the host nations, they increase the levels of competition for the available jobs and force the natives to provide the semi-skilled and unskilled parts of labor requirements. The governments should improve the curriculum by encouraging technical training among institutions of higher learning. The locals should provide stiff competition against the preferred skilled labor from other countries. In order to achieve this, governments should encourage the development of specific faculties within institutions offering specific courses. For instance, all universities within the country should have well developed schools of information technology to produce graduates who can utilize the opportunities provided by the influx of FDI in the telecommunication sector.
Another challenge stems from the inability of developing countries lack the necessary infrastructure to support rapid economic growth. For instance, Nigeria has many educational institutions that produce graduates. The rise in the number of graduates is too high such that the economy cannot sustain the demand for jobs within the market. In addition, other structures such as transport, immigration, and security are not well developed to the extent that they can sustain the rapid growth of the economy. Lastly, population pressure forces the government to reduce the amount of money spent on other investments. The government has to address other needs such as food security before focusing on foreign direct investment. It explains the reason for the significant drop in the inflow of FDI in some of the years ("Socio-Economic Effect of Telecommunication Growth in Nigeria: An Exploratory Study | Awoleye Michael - Academia.edu," 2012, p. 9). The SPSS analysis showed the ability of foreign investment in influencing the economies of host nations. It is important for countries to take measures that ensure good international relations. Nigeria is at the forefront of good international relations by joining international and regional bodies that foster trade. It is an active member of ECOWAS, which enables other member countries to benefit from the technology from other countries.
Other countries can emulate the policies adopted by Nigeria and the manner in which the country has handled inflow of FDI into the telecommunication sector. Specifically, developing economies that have strained in establishing investment relationships with other countries can use Nigeria as a good example of FDI strategic implementation. Establishing relation with the right partners can lead to the overall growth of the economies in spite of the challenges that they encounter. Today, Nigeria is one of the most influential nations in the West African region. It can use the power to promote good investment decisions and policy formulation within the whole continent.
IMPACT OF FDI ON ECONOMIC DEVELOPMENT OF NIGERIA | Mustapha Hussein - Academia.edu. (n.d.). Retrieved from http://www.academia.edu/3698728/IMPACT_OF_FDI_ON_ECONOMIC_DEVELOPMENT_OF_NIGERIA
Izuchukwu, O., & Ofori, D. (2014). WHY SOUTH-SOUTH FDI IS BOOMING: CASE STUDY OF CHINA FDI IN NIGERIA.
Nkechi, O. A., & Okezie, O. K. (2013). INVESTIGATING THE INTERACTION BETWEEN FOREIGN DIRECT INVESTMENT AND HUMAN CAPITAL ON GROWTH: EVIDENCE FROM NIGERIA.
Scott, A. (2013). Foreign Financial Resources Inflows and Stock Market Development: Empirical Evidence from Nigeria and Ghana. The International Institute for Science, Technology and Education (IISTE.
Socio-Economic Effect of Telecommunication Growth in Nigeria: An Exploratory Study | Awoleye Michael - Academia.edu. (n.d.). Retrieved from http://www.academia.edu/2019398/Socio-Economic_Effect_of_Telecommunication_Growth_in_Nigeria_An_Exploratory_Study