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Impact of Infrastructure Investment on Economic Growth in Nigeria: An Autoregressive Distributed Lag Approach

Author

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  • Irene Olanma Onwuemeka

    (Department of Economics, Renaissance University Agbani, Enugu State, Nigeria)

  • Uche Collins Nwogwugwu

    (Department of Economics, Renaissance University Agbani, Enugu State, Nigeria)

  • Emmanuel Onwuka

    (Department of Economics, Renaissance University Agbani, Enugu State, Nigeria)

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.

Suggested Citation

  • Irene Olanma Onwuemeka & Uche Collins Nwogwugwu & Emmanuel Onwuka, 2022. "Impact of Infrastructure Investment on Economic Growth in Nigeria: An Autoregressive Distributed Lag Approach," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(1), pages 288-298, January.
    • Handle: RePEc:bcp:journl:v:6:y:2022:i:1:p:288-298
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    References listed on IDEAS

    as
    1. Godday Uwawunkonye Ebuh & Ifeoma Betty Ezike & Tersoo Shimonkabir Shitile & Ebow Suleiman Smith & Timipre Mary Haruna, 2019. "The Infrastructure–Growth Nexus in Nigeria: A Reassessment," Journal of Infrastructure Development, India Development Foundation, vol. 11(1-2), pages 41-58, June.
    2. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    3. Paresh Kumar Narayan, 2005. "The saving and investment nexus for China: evidence from cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1979-1990.
    4. Ajibola Arewa & Prince C. Nwakahma, 2013. "Macroeconomic Variables and the Dynamic Effect of Public Expenditure: Long-term Trend Analysis in Nigeria," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(6), pages 1-2, December.
    5. Amadi Kelvin Chijioke & Alolote Ibim Amadi, 2020. "Government Expenditure on Infrastructure as a Driver for Economic Growth in Nigeria," Journal of International Business Research and Marketing, Inovatus Services Ltd., vol. 5(2), pages 20-26, January.
    6. Mary Modupe Fasoranti, 2012. "The Effect of Government Expenditure on Infrastructure on the Growth of the Nigerian Economy, 1977-2009," International Journal of Economics and Financial Issues, Econjournals, vol. 2(4), pages 513-518.
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