Impact of Infrastructure Investment on Economic Growth in Nigeria: An Autoregressive Distributed Lag Approach
- February 4, 2022
- Posted by: rsispostadmin
- Categories: Economics, IJRISS, Social Science
International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue I, January 2022 | ISSN 2454–6186
Irene Olanma Onwuemeka*, Uche Collins Nwogwugwu and Emmanuel Onwuka
Department of Economics, Renaissance University Agbani, Enugu State
*Corresponding Author
Abstract: This study examined the relationship between government spending on economic infrastructure and economic growth in Nigeria from 1989 to 2018. Real gross domestic product was used to proxy economic growth and was specified as a function of government spending on transport and communication, government spending on power and employment rate (as a proxy for the classical theory of labour force).The Autoregressive Distributed Lag Bounds method to co-integration was chosen to ascertain the impact and the long-run relationship between the dependent and independent variables. The short-run and long-run results showed that government spending on power exerted a positive but insignificant effect on Nigeria’s RGDP. However, government spending on transport and communication had a positive relationship in the short-run but negative relationship in the long-run. Furthermore, the Causality results showed a uni-directional causality running from RGDP to GEXP and EMP to GEXTC but there was no evidence to support the existence of causality between the remaining pairs of variable. It is recommended that in order for Nigeria to achieve infrastructure development success, it is important that the government redirect excessive revenue in the maintenance of government official to these pivotal sectors of the economy with a view to monitoring the implementation after disbursing funds to the affected ones to subsequently trigger economic growth.
Keywords: Economic infrastructure, Economic growth, Co-integration, ARDL, Nigeria.
I. INTRODUCTION
Adequate supply of infrastructure facilities has long been recognized by academics, policymakers and researchers not only as an important economic facilitator, but also as the backbone of economic growth and development activities for many industrialized countries (William, 2016; Orji and Worika, 2017; Ogbaro and Omotoso, 2017). Infrastructure plays a very important role in the growth process of an economy. In fact development economist have considered infrastructure to be a pre-condition for take-off into self-sustained growth (Rostow, 1960). Infrastructure refers to the basic physical and organizational structures needed for the operations of a society. It is broadly divided into two categories: economic and social. Economic infrastructure facilitates economic production and helps to produce items that are consumed by households. It includes transport, communication, power generation, water supply and sanitation facilities. Social infrastructure has a direct and an
