NIGERIA’S ECONOMIC SIZE AND ECONOMIC PERFORMANCE: A SEARCH FOR EXPLANATION

Abstract

Nigeria’s economy has grown in size as measured by GDP even surpassing that of South Africa. This growth has been comprised of three major components of Agriculture, Industry and Services. How is this increase in economic size driven by developmental variables? Using the Ordinary Least Square (OLS) and Error Correction Method (ECM), some key developmental variables of unemployment, human development, infrastructure, insecurity and capacity utilization were regressed on GDP. The result suggests that Nigeria’s economic size was not driven by developmental variables in spite of the fact that the model used was robust. With a Durbin Watson (DW) statistic of 2.65 and 2 R of 0.72, only infrastructure was significant at 0.10 level. All the variables, however, showed strong coefficients indicating that they are good regressors of economic size GDP. Unemployment led in the coefficient followed by infrastructure, human capital development and capacity utilization. Security came last. The anomalies of high GDP alongside insignificant determining variables were attributed to leakages and lack of transparency in the system. Amongst the recommendations were for the Nigerian government to show more political will in tackling corruption and insecurity, and to diversify the economy away from petroleum.