Capital Accumulation And Economic Development In Nigeria 1970 -2010 (Disaggregated Approach)

Abstract

This study empirically examine the relationship between capital accumulation  and economic development in Nigeria from 1970 – 2010. Capital accumulation was disaggregated into public, domestic private and foreign private capital accumulation, and their impact on economic development was empirically determined. The stationarity and non-stationarity of the data series were examined using Group Unit Root Test. The variables PCGDP, FPI, PINV, PUNIV, INFLA, IEC, attained stationarity after first differences. We established long-run relationship among the variables using Johansen cointegration test. The short-run dynamic adjustment required for stable long-run equilibrium relationship was carried out using the error correction technique. Here private investment (domestic) with a coefficient of 0.0000823 has positive and significant impact on economic development. Public investment with elasticity of -0.077590 impacted negatively and significantly on RPCGDP. The impact of Foreign Private Investment (FPI)  with elasticity of -0.00000101 on RPCGDP was negative and insignificant. Monetary, fiscal and exchange rate policies that will stimulate the growth of domestic investment should be vigorously pursued. Stable environment and incentives aimed at encouraging the inflow of foreign capital be a government priority. Transparency, probity and accountability in the management of public fund by public officials be strengthened.  The Study showed that disaggregation of Capital accumulation truly revealed the impact of each component on economic development than when the components are aggregated or studied in isolation of the other.

Key Words: Capital accumulation, Economic Development, Public Capital accumulation, Foreign Private Capital accumulation, Domestic Private Capital Accumulation, Disaggregation.