The Growth Effect Of Unemployed Resources And Inflation In Nigeria

Abstract

This paper investigates the growth effect of human resource unemployment, natural resource unemployment and inflation in Nigeria between 1986-2010 through the application of ordinary Least Square (OLS) technique and Augmented Dickey-Fuller technique in testing the unit root property of the series. The results of unit root suggested that all the variables of the model were stationary. The Johansen cointegration result shows that there existed 2 cointegrating equation, implying the existence of long run relationship between economic growth, unemployment (human and natural resources) and inflation (total, headline, core, and food inflation). The results further revealed that unemployment (both human and natural resources), total inflation and core inflation impacted positively on economic growth while headline and food inflation impacted negatively on economic growth in Nigeria. The result also shows that unemployment does not significantly affect economic growth, but inflation does. Hence, a good performance of an economy in terms of per capita growth may therefore be attributed to the rate of inflation in the country. A major policy implication of this result is that concerted effort should be made by policy makers to increase the level of output in Nigeria by diversifying the economy to including exploitation and exploration of natural resources in order to reduce unemployment and the prices of goods and services (inflation) so as to boost the growth of the economy. Another policy implication of this study is that government should adjust its production techniques to be labour intensive as against capital intensive and also close the border to some extent which is the likely measure to reduce unemployment and Inflation and increase domestic output level (GDP). The study found that when natural resources which Nigeria is blessed with were harness unemployment, inflation, poverty and income inequality will be a history.

Key words: Unemployment, Inflation, tapped natural resources, economic growth (RGDP), and cointegration.