Transportation and Economic Growth in Nigeria: Cointegration and Hsiao’s Causality Analysis

Abstract

This paper investigates the causal relationship between transportation and economic growth and transportation and employment in Nigeria. By applying techniques of co-integration and Hsiao‟s version of Granger causality, the results infer that economic growth causes total transportation. Economic growth also leads to growth in road transportation, while on the other hand; neither economic growth nor rail transportation affects each other. However, air transportation leads to economic growth. The implications of the study are that transportation development policy regarding road transportation would not lead to any side-effects on economic growth in Nigeria. However, transportation policy in the case of rail and air transportation should be adopted in such a way that it stimulates growth in the economy and thus expands employment opportunities.