For correspondence:-
Received: 11 April 2018 Accepted: 15 May 2018 Published: 30 June 2018
Citation: Capital Formation and Economic Growth in Nigeria. Account Tax Rev 2003; 2(2):131-142 doi:
© 2003 The authors.
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Abstract
The study investigates the influence of capital accumulation on economic growth in Nigeria. The researchersemployed trend analysis and advanced econometrics tests to ascertain the impact of capital formation and economic growth in Nigeria. The variables used in the analysis were subjected to unit root test to determine whether the variables are stationary or not. The model was subjected to co-integration testto determine the long run relationship between capital formation, and economic growth in Nigeria for the period of 1980-2016. The Granger causality test was also used to determine the causality between capital formation, and economic growth in Nigeria for the period of 1980-2016.Findings revealed that none of the models was stationary at level but were all stationary at first difference. The results also show that there is a long run significant relationship that exists between the variables examined and there is a causal relationship between capital formation and economic growth in Nigeria within the period under study. The result also revealed a negative non-significant relationship between economic growth and capital formation in Nigeria.The study recommends that policy formulators in Nigeria need to enact some investors’ friendly policies that will encourage, promote and attract more capital inflows (be it official or private inflows) and to provide a conducive and enabling environment for thegross fixed capital formation to thrive. There is need to play down on speculative businesses and to invest in the real sectors of the economy.
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