Is Higher Economic Growth Possible Through Better Institutional Quality? Evidence from Nigeria

Abstract

Using an ARDL model, this study analyzes the impact of institutional quality on economic growth in Nigeria. Employing time series data from the World Bank from 2002 to 2020, it was found that the variable for controlling corruption has a negative impact on economic growth both in the short and long run. More specifically, a one percent rise in corruption results in over nine per cent loss or decrease in economic growth. However, it was shown that long-term political instability has a negative impact on economic growth. Simply put, a rise in political instability by one per cent would lead to over six per cent decrease in growth rate. The findings support the idea that corruption eventually weakens economic performance. As a step in economic policy, it is important to make efforts to fight corruption in every facet of the economy.

Keywords: Institutions; growth; ARDL model; corruption, FDI.

JEL Code: E22, O47, F23.

DOI: 10.7176/JESD/14-8-05

Publication date: April 30^th 2023