International Journal of Research and Scientific Innovation (IJRSI) | Volume IX, Issue VIII, August 2022 | ISSN 2321–2705
Domestic Investment and Economic Growth in Nigeria, 1980-2020
Prof. Nnamocha, P. N.1, Anyanwu, Austin C. (PhD)2
1Professor of Economics, Dept. of Economics, Imo State University, Owerri, Nigeria
2Dept of Economics, Imo State University, Owerri, Nigeria
Abstract: The study examined domestic investment and economic growth in Nigeria for the period 1980 to 2020. The dependent variable was real GDP while the independent variables include corporate domestic private investment (proxied by banking sector lending to private sector), public sector investment (proxied by government capital investment expenditure) and domestic portfolio investment. The data were sourced from the Central Bank of Nigeria Statistical Bulletin and analyzed using the Ordinary Least Square Multiple regression analysis technique. The result showed that corporate domestic private investment had positive and significant effect on Nigeria’s economic growth while public sector investment (government capital expenditure) had significantly negative relationship with economic growth in Nigeria and domestic portfolio investment had an insignificant negative relationship with economic growth in Nigeria. The conclusion drawn from that the private sector domestic investment outperformed that of the public sector and that domestic portfolio investment was negative in relation to economic growth. The study recommended that government should intensify its capital expenditure especially to the real sector as this will help to improve domestic investment especially by the public sector. Equally, government should intensify efforts to further encourage the private sector through enacting favorable policies and giving the private sector enough support through public-private partnership programmes in order to enhance their domestic investments.
Key Words: Corporate Domestic Private investment, Economic Growth, Government Capital Expenditure, Public sector investment
I. INTRODUCTION
In recent years, there has been mounting debate about the importance of domestic corporate investment to economic growth and development especially in developing economies. Development in the World economies has shown that a country’s economic performance over time is determined to a large extent by its internal/domestic corporate investment policies and resources (i.e. government policies and private sector decision). It is accepted generally that long-term economic growth of a country will lead to a remarkable improvement in the standard of living of its citizens. A reduction in the widespread poverty which is a major feature of the Nigeria economy can be achieved through a sustained increase in domestic corporate investment. A closer watch at the pattern of domestic corporate investment in Nigeria is imperative in order to be able to achieve sustained growth.