Does Economic Growth Reduce Poverty in Nigeria?

Abstract

It is worrisome to discover that Nigeria is characterized by high rates of poverty in spite of increase in the growth rate of the economy in recent times and the huge revenues derived from oil. This paradox provoked this study. The study however examined the existence of significant relationship between economic growth and poverty in Nigeria if any. It provided an empirical answer to the startling question: Does Economic growth reduces poverty in Nigeria? The paper employed standard econometric method, Ordinary Least Square multiple regression, (OLS) to determine the relationship. The time series secondary data were screened using stationarity and co integration tests. The data were found to be stationary and co-integrated. The Empirical findings demonstrated a significant and direct relationship between economic growth and poverty in Nigeria. This implies that economic growth rate does not reduce poverty in Nigeria. In other words, the impressive growth of the economy in recent times could not yield an improvement in poverty. The so-called “trickle down” phenomenon, underlying the view that growth improves poverty is not supported by Nigeria’s data. The findings and the conclusion of the study suggested the need for the policy makers to ensure equitable distribution and allocation of the national income.  In the light of this suggestion, the policy makers should evaluate the pattern of public expenditures and ensure that they are properly harnessed to favour the poor. With the widely acknowledged encouraging relationship between literacy rate and poverty, this study suggested that there is need to strive to achieve a higher literacy rate in Nigeria.

Keywords: Economic growth, poverty, literacy rate, public expenditures and income distribution, Nigeria.