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The Determinants of Private Domestic Investment in Nigeria

Author

Listed:
  • Bakare A.S

    (Department of Economics Adekunle Ajasin University P.M.B 001 Akungba- Akoko Ondo State, Nigeria.)

Abstract

This study focalize the private domestic investment. The choice is to enable us study the implications of the policy shift of Nigerian government that placed emphasis on private sector as an engine of growth. The policy makers believe that private investment has a stronger and more favorable effect on growth than public investment, probably because private investment is more efficient and less closely associated with corruption. This study however analyzed the determinants of private investment in Nigeria using a time series data and an error correction mechanism. The paper discussed the trends in investment and also reviewed the literature on the topic. Empirical investigations showed that changes in real private investment in Nigeria are best explained by changes in political trend by a dummy variable representing political instability; macroeconomic instability and poor infrastructure. The econometric results suggested that political crises may have created a climate hostile to private investment in Nigeria. The overall measure of political and macroeconomic instability has been a major hindrance to private investment. The results suggested the need for the government to continue to develop the infrastructural base of the economy in order to boost the private sector.

Suggested Citation

  • Bakare A.S, 2011. "The Determinants of Private Domestic Investment in Nigeria," Far East Journal of Psychology and Business, Far East Research Centre, vol. 4(3), pages 27-37, August.
    • Handle: RePEc:fej:articl:v:4b:y:2011:i:3:p:27-37
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    References listed on IDEAS

    as
    1. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
    2. Joshua Greene & Delano Villanueva, 1991. "Private Investment in Developing Countries: An Empirical Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 38(1), pages 33-58, March.
    3. Serven, Luis & Solimano, Andres, 1992. "Private Investment and Macroeconomic Adjustment: A Survey," The World Bank Research Observer, World Bank, vol. 7(1), pages 95-114, January.
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    Cited by:

    1. Ambaye, Guesh Gebremeske & Berhanu, T. & Abera, G., 2013. "Modeling the Determinats of Domestic Private Investments in Ethiopia," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 5(4), pages 1-11, December.
    2. Maame Esi Eshun & George Adu & Emmanuel Buabeng, 2014. "The Financial Determinants of Private Investment in Ghana," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 3(1), pages 25-40.

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    More about this item

    Keywords

    Private Domestic Investment; Infrastructure; Corruption; Political Instability; Investment Climate; Private sector;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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