Savings, Investment and Economic Growth in Nigeria: An Autoregressive Distributive Lag Approach
Keywords:
ARDL, Investment; Economic Growth; Savings, Structural Breaks, Nigeria.Abstract
The study examined the impacts of savings and investment on economic growth in Nigeria, using some
statistical tests such as ARDL estimating technique, Augmented Dickey Fuller (ADF) and Bound co-integration test on
Nigerian data from 1980 to 2019. The estimation results show that savings and investment have negative and statistically
significant effect both in the short-run and long-run on economic growth in Nigeria. These suggest that Nigeria has grossly
low saving culture and may be experiencing deficient demand problems. This result affirms the classical view that both
savings and investment equilibrates. Infrastructural facilities (proxy by electricity) have negative and significant effects on
economic growth in Nigeria. The implications are that private provision of electricity is usually not cost effective and seems
to have a negative implication on the business’ profitability. It is therefore recommended that the focus of development
policies in Nigeria should be on the monetary and fiscal policies, as to encourage high investment and saving culture.
References
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Growth in Nigeria. ACTA Universitatis Danubius Vol 16, No 1, 2020 pp. 82 - 95.
Bacha, E.L., (1990), A Three-Gap Model of Foreign Transfers and the GDP Growth Rate in
Developing Countries, Journal of Development Economics, Vol. 32, 279-96.
Balassa, B. (1988), “Public Finance and Economic Development”, PPR Working Paper No.31,
World Bank, Washington, D.C.
Bai-Perran (2003), Econometrical analysis. Econometric Journal Vol. 123 no. 4 Pp 324, (2003).
Barro, R. J., (1997), Determinants of economic growth: A Cross-country empirical
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Belloumi, M. & Alshehry A. (2018). The Impacts of Domestic and Foreign Direct
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Blejer, M & Khan M. (1984), “Government policy and private investment in developing
countries”’ IMF Staff Papers, vol.31, no.2. pp.74-87
Bosworth, B.P. (1993), Saving and Investment in a Global Economy. Washington, D.C.:
Brookings Institution Press.
Carroll, C., & Weil, D. (1994), “Saving and Growth: A Reinterpretation.”
Fabry, Nathalie, and Sylvain Zeghni. 2002. Foreign direct investment in Russia: How the investment
climate matters. Communist and Post-Communist Studies 35: 289–303. [CrossRef]
Firebaugh, Glenn. 1992. Growth Effects of Foreign and Domestic Investment. American Journal of
Sociology 98:105–30. [CrossRef]
Greene, J. & D. Villanueva (1991). “Private Investment and Developing Countries:
An Empirical Analysis”, IMF Staff Papers, 38(1)
Ghura, D & B. Godwin (1997) Financial determinants of domestic investment flows: The role of
governance infrastructure. World development vol 30, No.11, pp1819-29.
Iamsiraroj, S. (2016). The foreign direct investment–economic growth nexus. International Review of
Economics and Finance 42: 116–33. [CrossRef]
Khan, M & D Villanueva (1991). “Macroeconomic Policies and Long-term Growth.”
AERC Special Paper, 13, May, p.39.
Khan, M.S., & Reinhart, C.M., (1990), Private investment and economic growth in
developing countries. World Development 18, 19-27.
Le, M.V. & Suruga, T., (2005). Foreign Direct Investment, Public Expenditure and
Economic Growth: The Empirical Evidence for the Period 1970-2001. Applied Economic
Letters 12, 45–49.
Lean, H. & Tan B.W.( 2011). Linkages between foreign direct investment, domestic investment and
economic growth in Malaysia. Journal of Economic Cooperation and Development 32:
75–96.
Liu, X., Burridge. P. & Sinclair J. N. (2002). Relationships between economic growth, foreign direct
investment and trade: Evidence from China. Applied Economics 34: 1433–40. [CrossRef]
Lucas, Robert. 1988. On the mechanics of economic development. Journal of Monetary Economics
22: 3–42.[CrossRef]
Maddison, A. (1992), “A Long-Run Perspective on saving.” Scandinavian Journal of Economics,
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Modigliani, F. (1970). “The Life-Cycle Hypothesis of Saving and Inter-country
Differences in the saving Ratio.” In W.A Eltis, M.F.G. Scott, and J.N. Wolfe,
eds., Induction, Trade, and Growth: Essays in Honour of Sir Roy Harrod.
Oxford: Clarendon Press.
Ntembe, A., Ajab, A. & Tawah, R. (2018) Analysis of public investments and economic growth in
Cameroon. Journal of Economics and Finance volume 42, pages591–614.
Ogwumike, F. O. (2002). An appraisal of poverty reduction strategies in Nigeria. CBN Economic
Financial Review, 39(4), pp.1-17.
Oyekale, A., Adeoti, A., & Oyekale, T. (2007). Regression-Based Approach to Income Inequality
Decomposition in Rural and Urban Nigeria. International Journal of Economic Perspectives,
1(1).
Quah, D. T., (1993). Galton’s Fallacy and Test of Convergence Hypothesis, Scandinavian Journal of
Economics, 95: 427-443.
Reza, N., Reed, M. & Tasan, M. (2014). Relationship between Savings and Economic Growth: The
Case For Iran Journal of International Business and Economics Vol. 2, No. 4, pp. 107-124
ISSN: 2374-2208(Print), 2374-2194(Online).
Roy, S., & Mandal K., 2012. Foreign direct investment and economic growth: An analysis for
selected Asian Countries. Journal of Business Studies Quarterly 4: 15–24.
Temiz, D., & Gokmen A.(2014). FDI inflow as an international business operation by MNCs and
economic growth: An empirical study on Turkey. International Business Review 23: 145–54.
[CrossRef]
Tochukwu N. (2018) Determinant of savings in Nigeria: Journal of monetary and economic
integration vol 11 no 2. pp.47-59.
World Bank (2015). “Distribution and Growth: Complements Not Compromises” Policy Research
Bulletin 6(3), May-July 6.
World Bank (2018). “Poverty Reduction Handbook”. The World Bank, Washington D.C.
Yaw A. (2000). “Determinants of private investment behavior” AERC Research
Paper 100. African Economic Research Consortium, Nairobi March 2000.
Saharan Africa. Journal of Policy Modeling 31: 939–49. [CrossRef]
Agu, O.C. (2015), Determinants of private Domestic Investment in Nigeria: An econometrics
Analysis. International Journal of Economics, Commerce and Management United Kingdom
Vol. III, Issue 4, April 2015 Licensed under Creative Common Page 1
http://ijecm.co.uk/ ISSN 2348 0386
Agu O.C & Nyatanga P. (2020), An Investigation into the Crude Oil Price Pass-Through to Economic
Growth in Nigeria. ACTA Universitatis Danubius Vol 16, No 1, 2020 pp. 82 - 95.
Bacha, E.L., (1990), A Three-Gap Model of Foreign Transfers and the GDP Growth Rate in
Developing Countries, Journal of Development Economics, Vol. 32, 279-96.
Balassa, B. (1988), “Public Finance and Economic Development”, PPR Working Paper No.31,
World Bank, Washington, D.C.
Bai-Perran (2003), Econometrical analysis. Econometric Journal Vol. 123 no. 4 Pp 324, (2003).
Barro, R. J., (1997), Determinants of economic growth: A Cross-country empirical
Study, MIT Press.
Belloumi, M. & Alshehry A. (2018). The Impacts of Domestic and Foreign Direct
Investments on Economic Growth in Saudi Arabia. Economies. 6 (18); Pg 1-17,
doi:10.3390/economies6010018. Accessed from www.mdpi.com/journal/economies.
Blejer, M & Khan M. (1984), “Government policy and private investment in developing
countries”’ IMF Staff Papers, vol.31, no.2. pp.74-87
Bosworth, B.P. (1993), Saving and Investment in a Global Economy. Washington, D.C.:
Brookings Institution Press.
Carroll, C., & Weil, D. (1994), “Saving and Growth: A Reinterpretation.”
Fabry, Nathalie, and Sylvain Zeghni. 2002. Foreign direct investment in Russia: How the investment
climate matters. Communist and Post-Communist Studies 35: 289–303. [CrossRef]
Firebaugh, Glenn. 1992. Growth Effects of Foreign and Domestic Investment. American Journal of
Sociology 98:105–30. [CrossRef]
Greene, J. & D. Villanueva (1991). “Private Investment and Developing Countries:
An Empirical Analysis”, IMF Staff Papers, 38(1)
Ghura, D & B. Godwin (1997) Financial determinants of domestic investment flows: The role of
governance infrastructure. World development vol 30, No.11, pp1819-29.
Iamsiraroj, S. (2016). The foreign direct investment–economic growth nexus. International Review of
Economics and Finance 42: 116–33. [CrossRef]
Khan, M & D Villanueva (1991). “Macroeconomic Policies and Long-term Growth.”
AERC Special Paper, 13, May, p.39.
Khan, M.S., & Reinhart, C.M., (1990), Private investment and economic growth in
developing countries. World Development 18, 19-27.
Le, M.V. & Suruga, T., (2005). Foreign Direct Investment, Public Expenditure and
Economic Growth: The Empirical Evidence for the Period 1970-2001. Applied Economic
Letters 12, 45–49.
Lean, H. & Tan B.W.( 2011). Linkages between foreign direct investment, domestic investment and
economic growth in Malaysia. Journal of Economic Cooperation and Development 32:
75–96.
Liu, X., Burridge. P. & Sinclair J. N. (2002). Relationships between economic growth, foreign direct
investment and trade: Evidence from China. Applied Economics 34: 1433–40. [CrossRef]
Lucas, Robert. 1988. On the mechanics of economic development. Journal of Monetary Economics
22: 3–42.[CrossRef]
Maddison, A. (1992), “A Long-Run Perspective on saving.” Scandinavian Journal of Economics,
94(2): 181-196.
Modigliani, F. (1970). “The Life-Cycle Hypothesis of Saving and Inter-country
Differences in the saving Ratio.” In W.A Eltis, M.F.G. Scott, and J.N. Wolfe,
eds., Induction, Trade, and Growth: Essays in Honour of Sir Roy Harrod.
Oxford: Clarendon Press.
Ntembe, A., Ajab, A. & Tawah, R. (2018) Analysis of public investments and economic growth in
Cameroon. Journal of Economics and Finance volume 42, pages591–614.
Ogwumike, F. O. (2002). An appraisal of poverty reduction strategies in Nigeria. CBN Economic
Financial Review, 39(4), pp.1-17.
Oyekale, A., Adeoti, A., & Oyekale, T. (2007). Regression-Based Approach to Income Inequality
Decomposition in Rural and Urban Nigeria. International Journal of Economic Perspectives,
1(1).
Quah, D. T., (1993). Galton’s Fallacy and Test of Convergence Hypothesis, Scandinavian Journal of
Economics, 95: 427-443.
Reza, N., Reed, M. & Tasan, M. (2014). Relationship between Savings and Economic Growth: The
Case For Iran Journal of International Business and Economics Vol. 2, No. 4, pp. 107-124
ISSN: 2374-2208(Print), 2374-2194(Online).
Roy, S., & Mandal K., 2012. Foreign direct investment and economic growth: An analysis for
selected Asian Countries. Journal of Business Studies Quarterly 4: 15–24.
Temiz, D., & Gokmen A.(2014). FDI inflow as an international business operation by MNCs and
economic growth: An empirical study on Turkey. International Business Review 23: 145–54.
[CrossRef]
Tochukwu N. (2018) Determinant of savings in Nigeria: Journal of monetary and economic
integration vol 11 no 2. pp.47-59.
World Bank (2015). “Distribution and Growth: Complements Not Compromises” Policy Research
Bulletin 6(3), May-July 6.
World Bank (2018). “Poverty Reduction Handbook”. The World Bank, Washington D.C.
Yaw A. (2000). “Determinants of private investment behavior” AERC Research
Paper 100. African Economic Research Consortium, Nairobi March 2000.
Published
2021-04-09
How to Cite
Chigozie, O., & Omolade, A. (2021). Savings, Investment and Economic Growth in Nigeria: An Autoregressive Distributive Lag Approach: Array. Acta Universitatis Danubius. Œconomica, 17(2). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/875
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Economic Development, Technological Change, and Growth
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