Technology Transfer Through Foreign Direct Investment and Its Contribution to Total Factor Productivity in Nigerian Manufacturing

This study investigates the role of technology transfer through foreign direct investment in improving total factor productivity in Nigeria's manufacturing sector, addressing a critical gap in the empirical literature on FDI spillover effects in Sub-Saharan Africa. While FDI is widely promoted as a vehicle for technology transfer, the actual productivity effects for host country manufacturers depend critically on absorptive capacity, industry linkages, and the nature of technology transferred. The research employs a panel data design using firm-level data from the National Bureau of Statistics Annual Survey of Enterprises and investment data from the Nigerian Investment Promotion Commission, covering manufacturing firms across 14 industrial sub-sectors from 2015 to 2022. Total factor productivity is estimated using the Levinsohn-Petrin semi-parametric approach, and the effect of FDI presence on TFP is assessed using panel regression with industry and year fixed effects, controlling for firm size, age, human capital, and export intensity. The theoretical framework draws on the endogenous growth theory, the knowledge spillover theory of entrepreneurship, and the absorptive capacity framework. The study distinguishes between horizontal and vertical spillover channels, examining whether forward and backward linkages between foreign and domestic manufacturers generate productivity improvements. Findings are expected to reveal heterogeneous spillover effects with positive productivity gains concentrated in capital-goods and chemicals sub-sectors where local firms have stronger absorptive capacity. Recommendations include targeted absorptive capacity building policies and linkage development programmes connecting multinational subsidiaries with local manufacturing suppliers. Keywords: technology transfer, FDI spillovers, total factor productivity, manufacturing, Nigeria