Air Transport Connectivity, Foreign Direct Investment and Economic Growth in Nigeria

This study examined the dynamic and causal relationships among air transport connectivity, foreign direct investment (FDI), and economic growth in Nigeria using annual time-series data spanning 1990–2024, a period characterised by substantial reforms in the aviation sector and the broader economy. The study employed the Autoregressive Distributed Lag (ARDL) model and Granger causality analysis to examine both the short-run dynamics and the long-run relationships among the variables. The short-run results revealed that improvements in air transport connectivity exerted a positive and statistically significant effect on real gross domestic product (RGDP), although the effect weakened over time because of adjustment costs and sector-specific constraints. Human capital also contributed positively to short-run economic growth, whereas inflation and trade openness exerted adverse effects. In contrast, FDI and infrastructure did not produce statistically significant short-run effects. The long-run estimates suggested that air transport connectivity and human capital were positively associated with economic growth, while FDI, government expenditure, and gross fixed capital formation exhibited positive but statistically insignificant relationships. Inflation, infrastructure, trade openness, and the real exchange rate displayed significant negative associations with economic growth. However, these long-run findings were interpreted with caution because the ARDL bounds test produced inconclusive evidence of cointegration, although the Johansen cointegration analysis indicated stable long-run equilibrium relationships among the variables. The weak contribution of FDI reflected structural and institutional constraints, including its concentration in the extractive sector, weak domestic linkages, limited technology transfer, and low absorptive capacity. The study concluded that strengthening air transport connectivity, enhancing human capital, improving institutional quality, promoting development-oriented FDI in productive non-extractive sectors, and maintaining macroeconomic stability were essential for achieving sustainable and inclusive economic growth in Nigeria.