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Economic Growth And Poverty Reduction In Nigeria: The Role Of Institutions

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Abstract

It is worthy of note that the link between economic growth and poverty can be altered in the presence of institutions. The role quality institutions play in economic growth and poverty cannot be overemphasized as it has continued to receive attention from academia and policymakers. Institutions can serve as substitutes or complements in affecting poverty when interacted with economic growth. This study examined the role of institutions in the nexus between economic growth and poverty reduction in Nigeria over the period 1984-2018, using the Autoregressive Distributed Lag cointegration technique. Two institutional quality variables were employed, namely; corruption control and political stability. Poverty was measured using per household consumption, while economic growth was proxied by per capita income. The study found that economic growth and institutions had positive effects on per household consumption in both the short and long run. This implied that as institutions and economic growth increased, per household consumption also increased, while poverty reduced. Furthermore, in the short run, the interactive effect of institutions and economic growth on per household consumption was negative, suggesting that the interaction of institutions and economic growth had a positive effect on poverty. This showed that institutions and economic growth played substitutive roles in poverty reduction in the short run. The interactive effect of institutions and economic growth in the long run was however positive on per household consumption, causing an increase in household consumption and a decrease in household poverty. This showed that institutions and economic growth played complementary roles in reducing poverty in Nigeria in the long run. The study concluded that strong institutions and sound economic growth are important in combating poverty.

Suggested Citation

  • Temitope DADA, James & FANOWOPO, Oyinkansola, 2020. "Economic Growth And Poverty Reduction In Nigeria: The Role Of Institutions," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 7(7), pages 1-15, June.
    • Handle: RePEc:ris:ilojep:0020
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    Citations

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    Cited by:

    1. Sharimakin Akinwumi & Dada James Temitope, 2020. "Access to Finance, Indigenous Technology and Food Security in Nigeria: Case Study of Ondo Central Senatorial District," Economics and Culture, Sciendo, vol. 17(2), pages 75-87, December.
    2. James Temitope Dada & Taiwo Akinlo, 2023. "Remittances-Finance-Growth Trilogy: Do Remittance And Financial Development Complement Or Substitute Each Other To Affect Growth In Nigeria?," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 68(236), pages 105-138, January –.
    3. James Temitope Dada & Taiwo Akinlo, 2021. "Foreign direct investment and poverty reduction in sub-Saharan Africa: does environmental degradation matter?," Future Business Journal, Springer, vol. 7(1), pages 1-10, December.
    4. Enisan Akinlo, Anthony, 2021. "Dynamic Linkages Between Government-Interventionists’ Policies, Growth, Inequality And Poverty In Nigeria," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 8(2), pages 45-64, June.
    5. Moses Umkanagwa Paul & Prof Ibrahim Baba Iya, PhD & Miftahu Idris, PhD, 2023. "Impact of Financial Development and Economic Growth on Poverty in Middle Income African Countries," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 142-155, September.
    6. James Temitope Dada & Ezekiel Olamide Abanikanda, 2022. "The moderating effect of institutions in foreign direct investment led growth hypothesis in Nigeria," Economic Change and Restructuring, Springer, vol. 55(2), pages 903-929, May.
    7. Folorunsho M. Ajide & James T. Dada, 2023. "Poverty, entrepreneurship, and economic growth in Africa," Poverty & Public Policy, John Wiley & Sons, vol. 15(2), pages 199-226, June.
    8. Omaku Angulu Abubakar & Habakuk Aboki, 2021. "Challenges of Poverty on National Development in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(09), pages 535-540, September.
    9. Taiwo Akinlo & James Temitope Dada, 2021. "The moderating effect of foreign direct investment on environmental degradation-poverty reduction nexus: evidence from sub-Saharan African countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(11), pages 15764-15784, November.
    10. James Temitope Dada & Adams Adeiza & Noor Azizi Ismail & Arnaut Marina, 2022. "Investigating the link between economic growth, financial development, urbanization, natural resources, human capital, trade openness and ecological footprint: evidence from Nigeria," Journal of Bioeconomics, Springer, vol. 24(2), pages 153-179, July.
    11. Dada James Temitope & Awoleye Emmanuel Olayemi & Arnaut Marina & Al-Faryan Mamdouh Abdulaziz Saleh, 2023. "Revisiting the Military Expenditure-Growth Nexus: Does Institutional Quality Moderate the Effect?," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 29(1), pages 19-42, February.

    More about this item

    Keywords

    Economic Growth; Poverty Reduction; Institutions; Corruption Control; Political Stability; Nigeria;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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