Domestic Investment and Economic Growth in Nigeria From 1970-2013: An Econometric Analysis

Imoisi Anthony Ilegbinosa, Abuo Micheal, Sogules Ipalibo Watson

Abstract


This study examines the impact of domestic investment on economic growth in Nigeria using annual time-series data from 1970-2013. Multiple regression and co-integration methods were employed to analyze the data. The objectives of this study includes: to examine the impact of private and public investment on economic growth and to analyze the trends of private investment, public investment and economic growth in Nigeria from 1970- 2013. The study divided government expenditure into productive and protective expenditures, and found out the crowding in and crowding out impact of government investment on private investment. The result of the analyzed data illustrated that private investment and government productive investment had positive but insignificant impact on economic growth; while government protective investment had negative as well as insignificant impact on economic growth within the period under study. In addition, the study illustrated that government investment on administration, economic, social and community services crowded in private domestic investment but only investment on economic services was statistically significant for the period under study. Based on the results, the following recommendations were made: that government should improve on its budget implementation, rationalization and give more priority to expenditures on economic and social services that make up for private investment, rather than expenditures on national assembly expenses as well as transfers that replaces private investment. In addition, deposit money banks should be encouraged to provide more long-term loans to the real sector of the economy.


Keywords


Domestic investment; Private investment; Government investment; Crowding in; Crowding out; economic growth; Government expenditure

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DOI: http://dx.doi.org/10.3968/%25x

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