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Relative Effects Of Public And Private Investment On Economic Growth In Nigera

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  • Olumide S. Ayodele
  • Frances N. Obafemi
  • Elijah A. Udoh

Abstract

This paper assesses the relative effects and effectiveness of public and private investment expenditure on short and long-run economic growth in Nigeria over 1970–2007. Findings of the dynamic error correction and the vector error correction models are threefold. First, public investment has a positive and relatively stronger effect on growth in the short run. Second, the impact of private investment increases from short to long term; in the long run, private investment clearly exerts stronger influence on growth performance. Nevertheless, private investment positively affects economic growth in Nigeria only in the long run while the positive impact of public investment is observed in the short as well as long term. Finally, the contribution of human capital investment is overwhelmingly higher than that of physical capital, both private and public. Thus, the results indicate that massive direct public investment in critical economic infrastructure like power and transportation and human capital development (especially on education and health) is crucial for more impressive growth record in Nigeria.

Suggested Citation

  • Olumide S. Ayodele & Frances N. Obafemi & Elijah A. Udoh, 2011. "Relative Effects Of Public And Private Investment On Economic Growth In Nigera," West African Financial and Economic Review (WAFER), WEST AFRICAN INSTITUTE FOR FINANCIAL AND ECONOMIC MANAGEMENT (WAIFEM), vol. 8(2), pages 27-48, December.
    • Handle: RePEc:gvj:journl:v:8:y:2011:i:2:p:27-48
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