Do economic policy uncertainty and geopolitical risk impede economic transformation? Evidence from resource rich country

Elias A. Udeaja (), Jeremiah M. Tule (), Seyi Akadiri (), Elijah O. Akanni () and Peter F. Offum ()
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Elias A. Udeaja: Central Bank of Nigeria
Jeremiah M. Tule: Bingham University
Elijah O. Akanni: Bingham University
Peter F. Offum: Central Bank of Nigeria

Journal of Economics and Finance, 2024, vol. 48, issue 4, No 9, 1145-1165

Abstract: Abstract This study explores the relationship between economic policy uncertainty, geopolitical risk, and economic transformation in Nigeria using the Autoregressive Distributed Lag (ARD) /bound test model from 1985 to 2022. The finding reveals a dual impact: economic policy uncertainty is identified as a hindrance to economic transformation, while, somewhat surprisingly, geopolitical risk is found to have a positive influence on this transformation. The analysis underscores that unclear, unpredictable, or frequently changing economic policies can impede investment, business planning, and overall economic growth, thereby impinging on economic transformation. In contrast, while geopolitical risks introduce uncertainties, they also present opportunities for strategic positioning, international collaborations, and adaptation to evolving global dynamics. Consequently, this research provides essential policy insights, emphasizing the need to mitigate economic policy uncertainty and leverage the advantages of global geopolitical risks to propel Nigeria towards sustainable economic transformation. The study underscores the importance of economic policy clarity and stability while recognizing the potential benefits of engaging with global geopolitical dynamics. By implementing these policy recommendations, Nigeria can navigate the complexities of economic policy uncertainty and geopolitical risk, facilitating its path to enduring economic transformation.

Keywords: Economic policy uncertainty; Geopolitical risks; Economic transformation (search for similar items in EconPapers)
JEL-codes: G11 G18 O11 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s12197-024-09690-x

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