THE GEOGRAPHIES OF CAPITAL: STATE POLITICS AND THE SPATIAL DISTRIBUTION OF FOREIGN DIRECT INVESTMENT IN NIGERIA, 2000-2024

Abstract

Since Nigeria’s return to democracy in 1999, Foreign Direct Investment (FDI) has been promoted as a key driver of economic growth, diversification, and job creation. Both federal and state governments have competed to attract FDI through incentives, infrastructure, and investment promotion. Official data show that Nigeria attracted approximately $142.3 billion in FDI inflows between 2000 and 2024 (CBN, 2024; UNCTAD, 2024). However, the benefits of this investment have been spatially uneven. Three states — Lagos, Federal Capital Territory (FCT) Abuja, and Rivers — account for over 80% of non-oil FDI, while 20 states collectively receive less than 5% of total inflows. This concentration raises questions about the political and institutional factors that shape investment location decisions in a federal system. This study examines how state politics influences the spatial distribution of FDI in Nigeria and the implications for regional economic outcomes from 2000 to 2024. Anchored in Political Economy and Economic Geography, using David Harvey’s theory of uneven geographical development and Douglass North’s institutional theory, the study adopts a concurrent mixed-methods design. Quantitatively, it uses panel fixed-effects regression, Herfindahl-Hirschman Index, and GIS mapping with data from Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS), Nigerian Investment Promotion Council (NIPC), and Armed Conflict Location and Event Data Project (ACLED) covering 37 entities. Qualitatively, it uses 15 Key Informant Interviews (KII) with policymakers, investors, and academics. Findings show that FDI location is not determined by market size alone. Infrastructure quality, security, resource endowments, and political alignment significantly determine FDI flows. Being in the President’s party increases state FDI by 27.6%, while election years reduce inflows by 18.4%. The result is a self-reinforcing cycle that deepens regional inequality. The study concludes that without deliberate spatial industrial policy, FDI will continue to reinforce Nigeria’s core-periphery divide.