Gross Capital Formation, Infrastructure, and Economic Development in Nigeria

Adegboyega Samson Opadeji (), Oladimeji Olaniyi (), Adewale Mathew Adekanmbi () and Joseph Oluremi Olubitan ()
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Adegboyega Samson Opadeji: Dominion University Ibadan
Oladimeji Olaniyi: Olabisi Onabanjo University
Adewale Mathew Adekanmbi: Nigeria
Joseph Oluremi Olubitan: Dominion University Ibadan

EuroEconomica, 2023, issue 2(42), 64-73

Abstract: In Nigeria, the reduction in capital formation and the extent to which the dismal state of most infrastructure facilities, as well as their state of disrepair, impair the nation’s growth potential are relatively unknown. Given this, this study utilizes the Johansen co-integration test and the Vector Error Correction Model to analyze the effects of gross capital formation and infrastructure in the development of Nigeria’s economy from 1991 to 2021. The co-integration result revealed that the variables have a long-run relationship while the VECM result revealed that gross capital formation has not significantly impacted economic development while infrastructure had a significant positive effect on economic development in Nigeria during the study period. Based on the findings, the study recommends that the government and private sectors should collaborate so as to provide an enabling environment that will enhance capital investments in the economy. Also, gross capital formation should be efficiently channeled with a sizable amount accorded to infrastructural development which in turn translates to economic development.

Keywords: Gross Capital Formation; Economic Development; Infrastructure; Nigeria; VECM (search for similar items in EconPapers)
Date: 2023
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