Investment as a Determinant of Per-Capita Income Growth in Nigeria: An Empirical Analysis

Abstract

This study investigates the impact of investment on long-run per-capita income growth in Nigeria within the period of 1970 and 2014. It also finds out other macroeconomic determinants of long-run output per-capita growth. The study employs the Ordinary Least Square (OLS) estimation technique to establish the links based on the sourced time series variables from the Central Bank of Nigeria (CBN). Empirical findings revealed that openness of trade has positive and significant impact on growth rate of per capita income in Nigeria. However, growth rate of capital as a percentage of GDP, government effectiveness measured by government expenditure to GDP and school enrolment rate have indirect relations with growth rate of per capita income of Nigeria. The central authority or law makers should effectively regulate and monitor the factors affecting per capita income growth in order to foster real sustainable growth. The study concludes that macroeconomic policies and stability indicators are not the only obstacle to convergence in real income and catch up growth.

Keywords: Per-capital income, investments, macroeconomic indicators, OLS, convergence.