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Assessing the Drivers of Steady State Economic Growth in Nigeria


MPRA Paper from University Library of Munich, Germany

Abstract: This study assesses the effects of foreign direct investment (FDI), government expenditures on education and health, trade openness, and initial income on steady state economic growth in Nigeria. The study utilised the Nonlinear Autoregressive Distributed Lag model with data obtained from the world bank development indicator database covering the period 2000Q1 to 2021Q4. The long run results showed evidence of asymmetric response of steady state economic growth to shocks emanating from FDI and health expenditure only. The impact of positive changes in FDI is greater than that of negative changes, while positive changes in health expenditure, although statistically insignificant, exert lesser influence than negative changes. Also, education expenditure is found to influence steady state economic growth positively. These findings are consistent with endogenous growth theory, which highlights the importance of technological innovation and human capital accumulation for sustainable growth. Furthermore, the estimated parameter of initial income is positive, indicating a possibility of convergence, however, trade openness has a marginal negative effect on steady state economic growth, reflecting the effect of unequal international trade competition. The study emphasized the need to intensify effort in attracting and retaining FDI, as well as re-evaluating trade policies to foster sustainable growth in Nigeria.

Keywords: Steady state; asymmetry; endogenous growth (search for similar items in EconPapers)
JEL-codes: C5 O4 (search for similar items in EconPapers)
Date: 2023-09-30
New Economics Papers: this item is included in nep-afr
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