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Determinants of economic growth in nigeria: an autoregressive distributed lag (ardl) modeling approach
Determinants of economic growth in nigeria: an autoregressive distributed lag (ardl) modeling approach
Table Of Contents
- TITLE PAGE …………………………………………………………………………………………………………… i DEDICATION ………………………………………………………………………………………………………… ii CERTIFICATION …………………………………………………………………………………………………. iii ACKNOWLEDGEMENTS ……………………………………………………………………………………… iv TABLE OF CONTENTS ………………………………………………………………………………………….. v LIST OF FIGURES ……………………………………………………………………………………………….. vii LIST OF TABLES ……………………………………………………………………………………………….. viii ABBREVIATIONS ………………………………………………………………………………………………… ix ABSTRACT ……………………………………………………………………………………………………………. x
Chapter ONE
INTRODUCTION
- 1.1Introduction ………………………………………………………………………………………………….. 1
- 1.2Background of the Study ……………………………………………………………………………….. 1
- 1.3Statement of the Problems ……………………………………………………………………………… 3
- 1.4Research Questions ……………………………………………………………………………………….. 3
- 1.5Aims and Objectives of the Study …………………………………………………………………… 4
- 1.6Research Hypothesis ……………………………………………………………………………………… 4
- 1.7Significance of the Study ……………………………………………………………………………….. 4
Chapter TWO
LITERATURE REVIEW
- 2.1Introduction ………………………………………………………………………………………………….. 6
- 2.2Nature and Structure of the Nigerian Economy ……………………………………………….. 10
- 2.3Some Factors Used to Determine Nigerian Economy ………………………………………. 14
- 2.4Advantages of the ARDL Models Over Other Techniques. ………………………………. 18
Chapter THREE
SYSTEM DESIGN AND IMPLEMENTATION
- THEORETICAL FRAMEWORK AND METHODOLOGY
- 3.1Introduction ………………………………………………………………………………………………… 19
- 3.2Data Sources and Description of Variables …………………………………………………….. 19
- 3.3Autoregressive Distributed Lag (ARDL) Model …………………………………………….. 20 3.
- 3.1General Model for the ARDL ……………………………………………………………………….. 21 3.
- 3.2Main Features of the ARDL Approach …………………………………………………………… 21
- 3.4Co-integration Test ……………………………………………………………………………………… 22
- 3.5Unit Root Tests …………………………………………………………………………………………… 23 3.
- 5.1Augmented Dickey Fuller (ADF) Test …………………………………………………………… 24 3.
- 5.2Hypothesis Testing ……………………………………………………………………………………… 24 3.
- 5.3Kwiatkowski, Philip, Schmidt, and Shin (KPSS) Test ……………………………………… 25 vi
- 3.6ARDL Bounds Test Approach ………………………………………………………………………. 26 3.
- 6.1The General Bound Test For ARDL Model ……………………………………………………. 27
- 3.7Long Run Model …………………………………………………………………………………………. 27
- 3.8Short Run Model …………………………………………………………………………………………. 28
- 3.9Error Correction Model ……………………………………………………………………………….. 28
- 3.10Diagnostics Test ………………………………………………………………………………………….. 30
- 3.11Testing for Serial Correlation ……………………………………………………………………….. 30 3.
- 11.1Durbin-Watson d-Test …………………………………………………………………………………. 30 3.
- 11.2Breusch-Godfrey or Lagrange Multiplier Test ………………………………………………… 31 3.
- 11.3Stability Test ………………………………………………………………………………………………. 31
- 3.14Hypothesis …………………………………………………………………………………………………. 32
- 3.15Maximum Likelihood Estimation ………………………………………………………………….. 33
- 3.16Software’s For The Analysis …………………………………………………………………………. 37
- 3.17Model Selection Method ………………………………………………………………………………. 38
- 3.18Models Specification …………………………………………………………………………………… 39
- 3.19Using ARDL Model for Estimated Variables ………………………………………………….. 39
- 3.20Using Unit Root Test for the Variables ………………………………………………………….. 40
- 3.21Bound Test Approach ………………………………………………………………………………….. 41
- 3.22Long Run Specification Model ……………………………………………………………………… 44
- 3.23Short Run Specification Model ……………………………………………………………………….. 45
Chapter FOUR
SYSTEM TESTING AND EVALUATION
- RESULTS AND DISCUSSION
- 4.1Tests for Non-Stationery ………………………………………………………………………………. 47
- 4.2Results for Unit Root Test ……………………………………………………………………………. 47
- 4.3Graphical Solutions of the Unit Root Tests …………………………………………………….. 49
- 4.4Plot of CUSUM and CUSUMSQ (Stability Test) For LGDP as Depended Variable ………………………………………………………………………………………………………………… 56
- 4.5Analysis Using ARDL for LFDI as Depended Variable …………………………………… 58 4.
- 5.1Plot of CUSUM and CUSUMSQ (Stability Test) for FDI ………………………………… 61
Chapter FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
- CONLUSION AND RECOMMENDATION
- 5.1Summary ……………………………………………………………………………………………………. 63
- 5.2Conclusion …………………………………………………………………………………………………. 64
- 5.3Recommendation ………………………………………………………………………………………… 64 REFERENCES …………………………………………………………………………………………… 66
Thesis Abstract
The research also examines the relationship between the ARDL procedure and the fully
modified OLS approach of Phillips and Hansen to estimation of cointegrating
relationship between all the variables, and economic growth, these results provide
strong evidence in favor of a rehabilitation of the traditional ARDL approach to time
Series econometric modelling. The ARDL approach has the additional advantage of
yielding consistent estimates of the long-run co-efficient that is asymptotically normal
irrespective of whether the underlying regressors are I(1) or I(0).,This research provides
an empirical analysis of the relationship between economic growth and its determinants
factors with special focus on gross domestic product, foreign direct investment and
other important factors in Nigeria, using data from the period of 1976 to 2010, we also
in employed ARDL bounds testing for the long run relationship and ECM for the short
run dynamics. The findings suggest a positive relationship between efficient real GDP
and foreign direct investment and economic growth both in short run and long run.
Money supply and inflation have negative effects on economic growth while fiscal
deficit and foreign direct investment have positive effects on growth. Foreign direct
investment is found to have significant positive effect on growth. The results are
consistent with the theoretical and empirical prediction.
Thesis Overview
<p> 1.1 Introduction<br>Economically developed countries have been able to reduce their poverty level,<br>strengthen their social and political institutions, improve their quality of life, preserve<br>natural environments and achieve political stability [Barro (1996); Easterly (1999);<br>Dollar and Kraay (2002a); Fajnzylber,. (2002)]. After the World War II, most of the<br>countries adopted aggressive economic policies to improve the growth rate of real gross<br>domestic product (GDP). The neoclassical growth models imply that during the<br>evolution between steady states; technology, exogenous rate of savings, population<br>growth and technical progress generate higher growth level (Solow 1956).<br>Endogenous growth model developed by Romer (1986) and Lucas (1988) argue that<br>permanent increase in growth rate depends on the assumption of constant and increasing<br>return to capita1.<br>Similarly, Barro and Lee (1992) investigate the empirical association between human<br>capital and economic growth. They seem to support endogenous growth model by<br>Romer (1990) that high light the role of foreign direct investment in the growth process.<br>Fischer (1993) argue that long-term growth is negatively linked with inflation and<br>positively correlated with better fiscal performance and factual foreign exchange<br>markets. In the context of developing countries, investment both in foreign direct<br>investment, money supply, and ability to adapt technological changes, open trade<br>policies and low inflation are necessary for economic growth.<br>1.2 Background of the Study<br>Nigeria is a West African economy with a long coastline along the Atlantic Ocean. The<br>country shares international borders with Benin, Chad, Cameroon and Niger. Nigeria<br>2<br>ranks 32 in the world in term of total area. The terrain of the country consists of<br>southern lowlands and plateaus in the central region have a mountainous surface, while<br>the North’s consist of plain. According to the 2009 estimates, the country has a total<br>population in excess of 154 million, of which almost 70% live below the international<br>poverty line; Nigerians economy is overtly depended on the petroleum sector.<br>The Nigerian economy is one of the most developed economies in Africa. According to<br>the UN classification, Nigeria is a middle-income nation with developed financial,<br>communication and transport sectors. It has the second largest stock exchange in the<br>continent.<br>The petroleum industry is central to the Nigerian economic profile. It is the 12th largest<br>producer of petroleum product in the world. The industry accounts for almost 80% of<br>the G.D.P share and above 90% of the total exports. Outside the petroleum sector, the<br>Nigerian economy is highly amorphous and lacks basic infrastructure. Several failed<br>efforts have been made after 1990 to develop other industrial sector. Owing to the surge<br>in international oil prices during 2007-08, Nigerian managed an annual G.D.P of<br>US$352.3 billion. The nation rank 33 in the world in term of G.D.P per capital of<br>US$2,400.The economic conditions of Nigerian have advanced over the last few years<br>as a result of the rapid phase of industrialization. The economy of Nigeria also<br>improved tremendously with foreign investment aided by high quality research and<br>development. Nigeria was under the British colonial rule for a considerable period of<br>time. During this phase, major raw materials and mineral were exported to foreign<br>countries along with food grain which is due course of time spear headed the rise of<br>slavery and exploitation of labor class by the Europeans.<br>3<br>After the achievement of independence in Nigeria efforts were made to revive the<br>economic growth of the country through a set of economic reforms. It’s important to<br>note that before the discovery of oil in Nigeria the country survived mainly on its<br>agricultural production. The present G.D.P growth rate has been 7% in the past few<br>years.<br>1.3 Statement of the Problems<br>Although various factors have been adduced to Nigerian economic growth performance,<br>the major problems has been adduce to the economy’s continued excessive reliance on<br>the fortunes of the oil market and the failed attempts to achieve any meaningful<br>economic diversification (Osuntogun. 1997), reflecting the effect of the so called<br>“Dutch disease” the need to correct the existing structural distortion and put the<br>economy on the path of sustainable growth is therefore compelling, this raise the<br>questions of what else need to be done in order to diversify the economy and develop<br>the various factors in order to realize the potential of the factors that determine<br>economic growth. This calls for new thoughts and initiatives, which is the essence of<br>this research.<br>1.4 Research Questions<br>According to the objectives stated bellow, the research questions that would be<br>examined in the course of the study are as follows<br>i. What has been the structure of the economic growth in Nigeria?<br>ii. What are the factors that are responsible for determine the economic growth in<br>Nigeria?<br>iii. What has been the performance of each factor on economic growth in Nigeria?<br>4<br>1.5 Aims and Objectives of the Study<br>. The specific objectives of the study are as follows<br>i. To determine the factors those are responsible for the performance of Nigerian<br>economic growth.<br>ii. To analyze and measure the contributions of each factor on economic growth in<br>Nigeria.<br>iii. Evaluate the effort of each factor on economic growth in Nigeria.<br>1.6 Research Hypothesis<br>Base on the models stated above, the hypothesis to be tested in this research is stated<br>bellow.<br>Hi: The factor has contributed significantly to the economic growth of Nigeria.<br>Ho: The factor has not contributed significantly to the economic growth of Nigeria.<br>1.7 Significance of the Study<br>The major significance of this study are as follows<br>i. It would provide an econometric assessment of the contribution of these factors<br>to the economic growth of Nigeria.<br>ii. It would provide detailed composition of these factors of Nigerian in recent time<br>apart from petroleum oil<br>5<br>1.8 Scope of the Study<br>This project focused on the factors that determine the economic growth in Nigeria as<br>necessitated by the devastating effect on the recent global economic crisis. Although<br>several attempts has been made to diversify the Nigerian economy since the<br>introduction of structural adjustment programmed (S.A.P) in 1986, no meaningful.<br>Success has been achieved. Therefore, this project would examine the trend, pattern and<br>composition of the factors responsible for Nigerian economic growth during the post<br>and pre-SAP era as well as its export profile, subsequently, the causes and consequence<br>of the neglect of the factors shall be identify. The study would also investigate the<br>contribution of all these factors to the economic growth of Nigeria with data ranging<br>from 1976to 2010<br>6 <br></p>Blazingprojects Mobile App
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