Abstract
This study evaluated the effects of foreign direct investment in the hotel sector in Owerri Metropolis. The objectives of the study were, to determine the effect of foreign direct investment on hotel industry in Imo State, assess the hotel industries that attract foreign direct investment in Imo State, identify the hotel operation and environment that attract foreign direct investment and determine the economic importance of foreign direct investment in the study area. The population for the study used was all the registered hotel in Owerri Metropolis. Data were collected through the use of structured questionnaire which was organized in section to reflect specific objectives. A self-administered survey were used in data collections. The study found that, the effect of foreign direct investment on hotel industry in Imo State, Contributes to the improvement of infra-structures in the hotel industry, generates employment opportunities, development of domestic competitiveness among hotel operation, Key for faster economic growth and development in the hotel industry and given its potential to increase productivity. The hotel industry facilities that attract foreign direct investment in Imo State were, location advantages and internalization advantages, political, economic and social stability of the hotel, entertainment and culture, Self-service technology and Its rich cultural and historical heritage, the wide variety in ecology, terrains and places of natural beauty. The hotel aspects that attract foreign direct investment in Imo State were conventions, Trade fairs, Sports and recreation, Food and beverage services and Political and economic summit. In conclusion, FDI play a significant role in developing the hotel industry in Nigeria and other developing countries, by providing the required capital and infrastructures such as international airports, highways and modern technologies which are the keystones to tourism development. Hence, most governments in developing countries often place the highest priority on attracting FDI for further development of the hotel industry and economic growth.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables viii
Abstract ix
CHAPTER 1: INTRODUCTION
1.1 Background to the Study 1
1.2
Statement of the Problem 3
1.3 Objective of the Study 4
1.4 Research Questions 4
1.5 Justification of the Study 4
1.7 Scope of the Study
5
CHAPTER 2: REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework of Foreign
Direct Investment 6
2.1.1 Forms of Foreign Direct Investment
7
2.1.3 Types
of Investment 8
2.1.3.1
Induced Investment 8
2.1.3.2
Autonomous Investment 8
2.1.4
Foreign Direct Investment and Economic Growth Globally 8
2.1.6 Foreign direct investment and its importance 11
2.1.7
According to the UNCTAD classification, forms of foreign investment 11
2.1.8 Hotel Investment 12
2.1.8.1 Status of the Hotel industry 16
2.1.9 Foreign Direct Investment (FDI) 17
2.1.10 FDI in Hotel Industry 19
2.1.10.1 Reasons to invest in the Hotel
industry 19
2.1.11 Challenges in attracting FDI in
the Hotel Industry 20
2.2 Theoretical Review 26
CHAPTER 3; RESEARCH
METHODOLOGY
3.1 Research Design 29
3.2 Area of the Study 29
3.3 Population for the Study 29
3.4.2 Sample and Sampling Technique 29
3.5 Instrument for Data Collection 30
3.6 Validity of the instrument 31
3.7 Reliability of the Instrument 31
3.8 Method of Data Collection 31
3.8 Methods of Data Analysis 32
CHAPTER 4: RESULT
AND DISCUSSION
4.1 The Demography Characteristics of the
Respondents 33
4.2 The effect of foreign
direct investment on hotel industry in Imo State 35
4.3 the hotel industry facilities that attract foreign direct
investment in Imo State 36
4.4 The hotel aspects that attract foreign direct investment 37
4.5 The economic importance of foreign direct investment in
the study area 38
4.1
Research Findings 38
4.2
Discussion of Findings 39
CHAPTER
FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary 43
5.1.1 Restatement
of Problem 43
5.2 Conclusion 44
5.3 Recommendation 45
REFERENCE 46
List of Table
Table 4.1 the existence of foreign direct investments in hotel
industry in Owerri Metropolis
Table
4.2 The Demography Characteristics of the Respondents
Table 4.3 The effect of foreign direct investment on hotel
industry in Imo State
Table 4.4 The hotel aspects that attract foreign direct investment
Table
4.5 The economic importance of foreign direct
investment in the study area.
CHAPTER
1
INTRODUCTION
1.1
BACKGROUND TO THE STUDY
Foreign direct investment (FDI) is a type of investment that can
be in the form of financial or real assets across a national boundary with the
sole aim of maximizing the objective function of the investors. These investors
can be individuals, firms or the government (Nwankwo, 2007). It is also defined
as an investment made to acquire a lasting management interest (normally 10% of
voting stock) in a business enterprise operating in a country other than that
of the investor (Mwillima, 2003; World Bank, 1993, 2007). Todaro and Smith, (2003) cited in Hayami,
(2001) recognized Foreign Direct Investment (FDI) as an important resource for
economic development. It was argued that the flows of FDI could fill the gap
between desired investment and domestically mobilized saving. This increase tax
revenues and improve management, technology, as well as labour skills in host
countries (Todaro and Smith, 2003). Foreign Direct Investment (FDI) constitutes the
most important form of foreign inflow to tackle the unfavourable macroeconomic
indicators. Foreign direct investment inflows (FDI) are external finance that
forms a component of international capital
inflows to developing economies and countries especially in the Sub-Saharan
Africa targeted at accelerating economic
growth and development in those countries / economies (Dabour, 2000; Moses et al.,
2013). FDI is an important factor in development due to its role in increasing
production capacity and rehabilitating human resources, which improves the
standard of living and welfare of citizens. Foreign investment also increases
the host country's foreign exchange earnings, increases the volume of its
exports, and improves its balance of payments status (Aleuqla, 2016). Foreign
direct investment (FDI) plays an important role in the economic development
projects of the host country. Foreign investment in tourism helps developing
countries to reduce the impact of the development gap between developing and
developed countries (UNCTAD, 2007). Expanding the investment base in the
country and enabling national capital to expand local products and improve the
infrastructure needed to meet the increasing demand for goods and services
positively affect the balance of payments. Foreign investments are also an
effective tool for transferring advanced methods of management, training, and
marketing, as well as modern technology and techniques. Foreign investments
contribute to creating more job opportunities in the host country (Lea, 2017).
The UNCTAD (2007) documents stated that FDI played a major role in the tourism
takeoff in 1970s inducing the country’s economic growth. Hence, most
governments in developing countries often place the highest priority on
attracting FDI, by experimenting with a variety of policies (Zhang and Chong,
1999). On the other hand, the growth of tourist arrivals induces an increasing
demand for goods and services such as food, accommodation and transportation.
Thus, governments often prefer to attract further FDI to expand domestic
products and infrastructure to cover the increasing tourist demand for goods
and services.
Hotels
plays an important role in activating and financing the economies of many
developed and developing countries. The degree of hotel contribution to
financing of economic development differs from one country to another depending
on the foreign direct investment development and the availability of the
hospitality infrastructure (Matias, 2004). Hotel is simply described as
accommodation and hospitality by ILO (2010) and in the opinion of Singh,
Schmidgall and Damitio (2011), it is an operating business that is housed in a
real estate asset - building. It has real estate and services trade categories.
Anywhere jobs are located with major concentrations of economic and commercial
activities; hotels will follow (Rutherford and O’Fallon, 2007). Hotel can therefore
be defined as a place where tourist stops (being the traveller) and becomes a
guest. It is an establishment that provides paid lodging on a short-term basis
and facilities which can range from a basic bed and storage for clothing to
luxury features (Arnaboldi and Spiller, 2011). The United Nations World Tourism
Organization (UNWTO) confirmed that between 70% and 75% of international
tourists’ expenditure go to hospitality services on an annual basis (Akpabio,
2007). This confirms the strategic importance of the sector to tourism and even
the economy. As part of hospitality industry, hotel in addition to
accommodation provision counts a wide range of services including restaurants,
casinos, private clubs, managed food service, event planning, tourism related
businesses, travel providers, and refers to the relationship process between a
guest and a host (Santoro, 2015).
1.2 STATEMENT OF THE
PROBLEM
Nigeria is in dire need of foreign capital for the on-going
internal economic adjustments. The country is characterized with low
per-capital income in conjunction with a low general standard of living while
the inflation rate and unemployment rate are getting high month by month as
well as year on year; hence the realization of substantial savings to effect capital
accumulation for investment is unfeasible (UNDP, 2007). This has made the
government crowd out the domestic savings and as well, rendered the dream of
domestic sourcing of finance for investment unrealistic and the scenario has
led to increased desire for foreign investment in the provision of desired
capital that will help in economic growth. Hence, the need for foreign capital
has become indispensable if the economy must come out of the woods to achieve
her vision and Economic Recovery and Growth Plan (ERGP) targets.
Therefore, this study is informed by the observed rising poverty
incidence in Nigeria despite the enormous Foreign Direct Investment (FDI) flows
into the country aimed at improving the economy and consequently reducing
poverty (Ogunniyi and Igberi, 2014; Oni, 2014). Olise, Anigbogu, Okoli and
Anyanwu (2012) argued that FDI inflows more than quadrupled, increasing from
N2.3 million in 1975 to N10.4 million in 1990, and thereafter, FDI inflows have
been rosy and increasing at a modest rate. The country is the most favoured
destination of foreign capital in Africa, gulping more than 15% of total FDI
flows into the continent (UNCTAD, 2012) (as cited by Ukamaka, David and
Moses, 2016). However, the 2019 UNCTAD report shows that Ghana attracted more
foreign capital inflow than Nigeria in 2018. This provides an insight into new
dimensions of FDI in sub-Sahara Africa as the uncertainties in policies in the
larger economies (Nigeria and South-Africa) led to this. Therefore, foreign
investors are diversifying their portfolio by increasing their investments in
small but viable economies in Nigeria.
1.3 OBJECTIVE
OF THE STUDY
The objective of the study is to determine the effect of foreign
direct investment in the hotel sector, the specific objectives are to;
i.
Determine the
existence of foreign direct investments in hotel industry in Owerri Metropolis
ii.
determine the
effect of foreign direct investment on hotel industry in Imo State
iii.
assess the
hotel industries that attract foreign direct investment in Imo State
iv.
identify the
hotel operation and environment that attract foreign direct investment
v.
determine the
economic importance of foreign direct investment in the study area.
1.5 RESEARCH
QUESTIONS
i.
What is the
existence of foreign direct investments in hotel industry in Owerri Metropolis
ii.
What are the
effect of foreign direct investment on hotel industry in Imo State
iii.
What are the
hotel industries that attract foreign direct investment in Imo State
iv.
What are the
hotel operation and environment that attract foreign direct investment
v.
What are the
economic importance of foreign direct investment in the study area.
1.5 Justification of the Study
The role of foreign direct investment in an economy cannot be over
emphasized in the emerging economies as they help in complementing the domestic
efforts of the government towards promoting economic growth and development. In
order to increase the standard of living of the people, governments need the
collaboration of foreign countries, institutions and agencies so as to promote
the global goals of equality and improved economic welfare.
This study shall therefore be of importance in academic and
practical research work. It will contribute and add to existing knowledge of
related topics.
1.7
SCOPE OF THE STUDY
The content scope of this research work is limited to the
relationship between foreign direct investment and hotel sector in Owerri
Metropolis, Imo State. Geographically, hotels in Owerri
Metropolis, Imo State will be used for the study.
The
consumers of hotel goods and services will constitute the respondents, and thus
formed the unit scope.
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