Attaining Sustained Economic Growth in Nigeria through the Neo-Classical Growth Model of Capital Accumulation

Abstract

The spread of capital accumulation as a result of globalization has many scopes and a variety of economic, political, social, and environmental implications. This paper examines Nigeria’s economic growth through the neoclassical growth model of capital accumulation in order to ascertain its applicability as theorized from the model and its spillover effects through globalization. The Vector Auto Regressive (VAR) Model is employed using time series data covering the period of 1981 – 2014. The result reveals that the benefits of capital accumulation through various channels (domestic savings, foreign direct investment, total trade, market capitalization, and trade openness) are yet to be achieved given the small magnitude of some of the coefficients. However, with the statistical significance, there is room for improvement. It is also evident that FDI has been significant, but its inflow is lopsided to the dominant oil sector – thus contributing little to the growth of the real economy. Also, to achieve sustained growth through accumulation, the endemic problems of poor infrastructure, weak regulation and institution, political will and unstable macroeconomic variables need to be readdressed. The study therefore recommends: that domestication of globalization through capital accumulation in Nigeria will go a long way in integrating her into the global economy through: channeling of foreign direct investment into growth enhancing sectors; encouraging savings and widening the capital market as a key organ for sourcing financial resource for sustained economic growth.

Keywords: Sustained Economic Growth, Neo Classical Model, Capital Accumulation, Globalization, Foreign Direct Investment