In recent years, the general assumption has been that developing economies, including Nigeria, are experiencing falling economic growth at an alarming rate. Despite all of Nigeria's ambitions for sustainable and inclusive growth, the country's economic growth has remained unsatisfactory and erratic. The main goal of this research is to look at a few key economic growth drivers in Nigeria in order to determine the degree of their influence on growth as well as the direction of causation between economic development and the selected growth indicators. For a period spanning 1980 to 2012, the study used Johansen Co-integration, Error Correction Model (ECM), and Granger Causality tests. The results show that a positive and significant long-run relationship exists between economic growth (GDP) and some selected economic growth-indicators, such as productivity index (industrial), stock market capitalization, and Foreign Direct Investment (FDI), indicating that they contribute effectively to growth, using the newer endogenous growth framework and based on empirical evidence. However, while trade openness has a positive influence, it is not large. Others (inflation, government fiscal deficit, and national savings) have a significant negative association with economic growth, implying that they are economic growth restrictions. Economic development and these selected determinants have various causal orientations - unidirectional, bidirectional, and independent. Overall, the speed of equilibrium adjustment (as indicated by a well-defined negative ECM coefficient) is modest, implying that in the near run, Nigeria's economic growth process adjusts slowly to disequilibrium changes in those drivers. demonstrating the policy lag effect As a result, the study suggests that the government should work to achieve long-term price stability, fiscal discipline, and economic efficiency through infrastructure support and improved technology in order to boost productive capacity. The importance of a stable polity and institutional reforms to boost commerce, domestic and international investments, should also be underlined. Policymakers must also be aware of the policy lag effect and construct policies in accordance with the projected size of expected changes.
Author(S) Details
O. S. Uwakaeme
Department of Banking and Finance Madonna University, Nigeria, Okija Campus, Anambra State, Nigeria.
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