CAPITAL FORMATION AND ECONOMIC GROWTH IN NIGERIA: AN ECONOMETRIC ANALYSIS

CAPITAL FORMATION AND ECONOMIC GROWTH IN NIGERIA: AN ECONOMETRIC ANALYSIS

ABINA, Adedigba Praise

Economics Department

Ignatius Ajuru University of Education, Port Harcourt

E-mail: Praise2009@yahoo.com

And

MOGBEYITEREN Odunola Lovelynn Boluwatife

Emmanuel Alayande College of Education, Oyo

School of Education

Department of Curriculum and Instruction

E-mail: lovemode20022002@gmail.com

Abstract

The study investigates the relationship between capital formation and economic growth in Nigeria: An Econometric Analysis. Foreign direct investment, government expenditure, gross fixed capital formation and savings rate were used to proxy capital formation while the gross domestic product was used to measure economic growth. The data for the study was sourced from Central Bank of Nigeria statistical bulletin (2021).The study employed, phillip-perron test which was used to determine the stationarity of the variables, Johansen co integration test was employed to determine the order of integration while error correction model was employed to determine the speed of adjustment to equilibrium. The empirical findings suggest that foreign direct investment has a negative and significant relationship with gross domestic product, government expenditure has a positive but an insignificant relationship with gross domestic product, gross fixed capital formation has a negative and significant relationship with gross domestic product and finally, savings rate has a negative and insignificant relationship with gross domestic product in the long-run. The study therefore recommends that there is need for policies that will make a reasonable substantial portion of foreign investors’ profit to be retained and re-deployed to other productive investment in the home country.

Key Words: Capital Formation, Savings, Economic Growth, Investment, Foreign Direct Investment.

Download

Abina, A.P & Mogbeyiteren, O.L.B (2020). Capital Formation and Economic Growth in Nigeria: An Econometric Analysis. African Journal of Business and Economic Development, 1(12), pp57-72.


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