PROPOSAL NIGERIA OIL

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MODULE TITLE: INTERNATIONAL BUSINESS REPORT
MODULE CODE: EC7P80
PROJECT PROPOSAL: DISENTANGLING THE RELATIONSHIP BETWEEN CORRUPTION, ECONOMIC
GROWTH, FDI AND OIL PRODUCTION: CASE STUDY OF NIGERIA
WORDCOUNT: 1625
DUE DATE: 19 JANUARY 2016
NAME: ISHENDINAYE SILAS KADZOMBA
MA INTERNATIONAL BUSINESS
LON MET ID: 14023415

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1. Background
The estimates of corruption in Nigeria provided by UNODC (2015) suggest that over $400 billion had been
stolen in the period from 1960 to 1999. The perceived level of corruption in Nigeria is very high, resulting in
the Transparency International Index score of 2.7 (10 being the highest; Source: transparency.org, 2014).
Moreover, a recent survey amongst inhabitants of Nigeria revealed that over 40% of court users have been
asked for bribes (UNODC, 2015), thus demonstrating the systemic nature of corruption in the country. The
existing body of economic literature suggests that corruption fuels the resource curse hypothesis, according
to which the level of natural resources in a country in fact inhibits its economic growth (Apergis and Payne,
2014). Consequently, fighting the corruption in Nigeria has become a major initiative aiming to produce a
substantial positive impact on the level of economic growth and development (UNODC, 2015). The existing
body of research however highlights the highly complex nature of this phenomenon. Abundance of oil
reserves has been linked with impeded economic growth (Apergis and Payne, 2014), oil production has
been associated with the country’s economic growth (Akinlo, 2012). Furthermore, while foreign direct
investment (FDI) has been assumed to have a positive impact on economic growth as it addresses the
shortage of domestic capital for economic growth (Adamu, Idi & Hajara, 2015), the inconclusive findings
depicted in the academic debate question the potential role of FDI in stimulating economic growth in Nigeria
(Yaqub, Adam & Ayodele, 2013). Additional complexity can be found in the interlink between corruption,
economic growth and FDI (Dreher and Gassebner, 2011; Agbiboa, 2012; Uma, 2013). This stream of
research has so far failed to reach any clear consensus or viable policy recommendations, highlighting the
need for further research.
1.1 Aim and Objectives
The main aim of the proposed study is to investigate the nature of the relationship between corruption,
economic growth, FDI and oil production in the context of Nigeria. This main research aim can be broken
down into the following set of research objectives.
- To review the existing body of theoretical and empirical studies on the relationship between corruption,
economic growth, FDI and oil production
- To examine the strength and significance of correlations between corruption, economic growth, FDI and oil
production in the context of Nigeria
- To compare and contrast the uncovered relationships within Nigerian context with the dynamics in other
countries in Africa (Kenya, Tanzania, Angola, Cote d’Ivoire)
- To investigate the predictive power of corruption and economic growth in attracting FDI into Nigeria and to
propose a practical set of recommendations for policy makers based on the outcomes of the analysis

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2. Methodology
The proposed study will adopt a case study approach focusing primarily on the context of Nigeria. The
rationale behind the selection of this case study country can be found in its dependence on revenues from oil
and gas industry to fuel the national economy as well as historically high levels of corruption. Building on the
phenomenological research philosophy, the study recognises the vital importance of contextual factors
affecting the dynamics of the studied phenomenon (Lewis, Thornhill & Saunders, 2007). For the purposes of
the proposed study, four key variables will be included into analysis, namely level of corruption, GDP per
capita, FDI inflow and oil production levels.
To begin with, the level of corruption will be assessed with reference to the index provided by Transparency
International (transparency.org, 2014). This index reflects a perceived extent of corruption in a country and is
assessed on a scale from 1 to 10. Secondly, available data from Google Public Data (2015) will be used to
retrieve values for GDP per capita and FDI inflow. Since the first corruption index for Nigeria has been
established in 1996, the studied period ranges from 1996 to 2013. The third and the final source of the data
comes from Index Mundi (2015) which provides aggregate volumes of oil produced according to countries.
In addition to the dataset for the studied case study country (Nigeria), additional oil producing (Angola, Cote
d’Ivoire) as well non-oil producing (Kenya, Tanzania) countries in Africa will be included in the analysis in
order to investigate the extent to which conclusions drawn about Nigeria can be extrapolated to other
countries in the region.
In terms of data analysis methods, the proposed study will rely on the use of a statistical software package
SPSS version 23.0 for Mac OS and both descriptive and inferential statistical methods will be used to
critically examine the studied relationship between corruption, economic growth, FDI and oil production. On
the one hand, descriptive statistical methods will be used to outline the general patterns emerging from the
data in terms of particular longitudinal trends. On the other hand, inferential statistical methods (namely
Pearson’s correlation test and multilinear regression analysis) will be used to examine the strength and
statistical significance of the relationships between the four studied variables. The analysis process will be
repeated for each of the four additional countries included in the analysis in order to support the examination
of the validity of the findings derived from data relating to Nigeria.

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3. Expected Outcomes / Contribution
The existing body of research has highlighted the vital role of relationships between corruption, economic
growth and FDI in the context of oil producing countries, however, the academic debate has so far failed to
reach any clear consensus on the dynamics of these factors. Moreover, although the studied topic has
attracted a significant amount of attention from the academic community, no prior research has examined all
of these factors at once. Particular streams of research focusing on the relationship between corruption and
economic growth, economic growth and oil production, and FDI and economic growth can be found within
the wider academic debate. However, numerous complex inter-relationships can be associated with these
elements and therefore highlight the need for a more systematic research into the studied topic. As a result,
both theoretical and practical contributions can be expected to emerge from the proposed study. On the one
hand, the theoretical contribution can be found in the more holistic conceptual framework which outlines the
inter-relationships between corruption, economic growth, FDI and oil production. On the other hand, the
conclusions derived from the proposed study are expected to enhance the current level of understanding of
the role corruption plays economic growth and FDI. As a result, practical implications are expected to be
found in the particular recommendations for policy makers on how to ensure economic growth in Nigeria.

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Reference List
Adamu, J., Idi, A. and Hajara, B. (2015), “FDI and economic growth nexus: Empirical evidence from Nigeria
(1970-2012)”, Journal of Economics and Sustainable Development, vol. 6, no. 6
Agbiboa, D. E. (2012), “Between corruption and development: The political economy of state robbery in
Nigeria”, Journal of Business Ethics, vol. 108, no. 3, pp. 325-345
Akinlo, A. E. (2012), “How important is oil in Nigeria’s economic growth?”, Journal of Sustainable
Development, vol. 5, no. 4
Apergis, N. and Payne, J. E. (2014), “The oil curse, institutional quality, and growth in MENA countries:
Evidence from time-varying cointegration”, Energy Economics, vol. 46, pp. 1-9
Bai, J., Jayachandran, S., Malesky, E. J. and Olken, B. A. (2013), “Does economic growth reduce
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Dreher, A. and Gassebner, M. (2011), “Greasing the wheels? The impact of regulations and corruption on
firm entry”, Public Choice, vol. 155, no. 3, pp. 413-432
Google Public Data (2015), available from: https://www.google.com/publicdata/ [accessed 06/01/2016]
Index Mundi (2015), “Oil production”, available from:
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Lewis, P., Thornhill, A. and Saunders, M. (2007), Research methods for business students, Pearson
Education UK
Park, J. (2012), “Corruption, soundness of the banking sector, and economic growth: A cross-country study”,
Journal of International Money and Finance, vol. 31, no. 5, pp. 907-929

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transparency.org (2015), “Corruption costs: Nigeria’s vital election agenda”, Transparency International,
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[accessed 03/01/2016]
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Yaqub, J. O., Adam, S. L. and Ayodele, J. (2013), “Foreign direct investment and economic growth in
Nigeria: An empirical analysis”, American Academic & Scholarly Research Journal, vol. 5, no. 1, pp. 74-82