The Effect of Corruption and Pipeline Vandalization on Nigeria’s Per Capita Income

Abstract

There is no concensus on the macroeconomic consequenses of corruption, neither is there, on the parts of the world more prone to it.  To some corruption greases the economy whilt to others corruption sands the conomy. This study, therefore, investigates the effect of corruption on per capita income of Nigeria. It also studies the impact of crude oil pipeline vandalisation (which is a brand of corruption), on the per capita income of Nigeria. The period of study spanned 1995 to 2015, covering different government regimes, in the country. The Vector error correction and long run Johansen co-integrating equation approach, useful for estimating both short-term and long-term effects of one time series on another are used in the analysis. Findings revealed that both corruption and pipeline vandalization have an inverse relationship as well as a significant effect on per capita income in the long run. Pipeline vandalization however, showed an inverse relationship in the first period of the short run. The short run dynamics revealed that the economy will return to equilibrium at rate of 30 percent. The study recommends the building of truly independent institutions to curb corruption, the stigmatization of corrupt persons and their families, strong economic policies to check pipeline vandalization.

Key words: Corruption, Pipeline vandalization, Per capita income.