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Journal of Social Economics Research

June 2018, Volume 5, 2, pp 39-50

Macroeconomic Indicators and Capital Formation Growth in Nigeria: A New Evidence

Anthony Orji

,

Jonathan E. Ogbuabor

,

Onyinye I. Anthony-Orji

,

Mbonu Chibudem O.

Anthony Orji 1 Jonathan E. Ogbuabor 1 Onyinye I. Anthony-Orji 1 ,
;Mbonu Chibudem O. 4

  1. Department of Economics, University of Nigeria, Nsukka, Nigeria 1

  2. Department of Economics, Enugu State University of Science and Technology, Nigeria 4

Pages: 39-50

DOI: 10.18488/journal.35.2018.52.39.50

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Article History:

Received: 16 August, 2018
Revised: 20 September, 2018
Accepted: 23 October, 2018
Published: 26 November, 2018

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Abstract:

This paper estimates the impact of macroeconomic indicators on the growth of capital formation in Nigeria. Adopting the Autoregressive Distributed Lag Model (ARDL), the empirical findings showed that Foreign aid which is proxied by Overseas Development Assistance (ODA) and Domestic Private Investment (DPI) had positive impact on capital formation growth in Nigeria, while exchange rate, trade openness, and external debt had negative impact for the period under review. The study therefore recommends that aid, especially from the West should not be highly depended upon as a major source of revenue for the development of the economy. Other macroeconomic determinants of capital growth that government should encourage include; savings, investment and the quality of institutions.
Contribution/ Originality
This study tests the impact of macroeconomic indicators on the growth of capital formation in Nigeria within the framework of the Autoregressive Distributed Lag Model (ARDL).

Keywords:

Macro indicators, Capital formation, Foreign aid, Domestic private investment, Real exchange rate

Reference:

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Bakare, A., 2011. The macroeconomic impact of foreign aid in Sub-Sahara Africa: The Case of Nigeria. Business and Management Review, 1(5): 24 – 32.

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Daniel, S., 2011. Trade openness, foreign aid and economic growth in post-liberalisation Ghana: An application of ARDL bounds test. Journal of Economics and International Finance, 3(3): 146-156.

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Salisu, A.A., 2007. Aid, policy and growth: Evidence from Sub-Saharan Africa. Being A Paper Submitted To The Global Development Network (GDN) In Respect Of 2007 Global Development Awards.

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Funding:

This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.

Acknowledgement:

All authors contributed equally to the conception and design of the study.

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