ANALYZING THE INFLUENCE OF EXTERNAL SECTOR FACTORS ON NIGERIA'S GDP PER CAPITA
By Michael Chukwuemeka Ogbu
Research Article
ANALYZING THE INFLUENCE OF EXTERNAL SECTOR FACTORS ON NIGERIA'S GDP PER CAPITA
ISSN: 3067-2333
DOI Prefix: 10.5281/zenodo.
Abstract
This study examined the impact of external sector determinants on economic growth in Nigeria. Specifically, the study examined the influence of exchange rate, foreign direct investment inflows, official development assistance received, and external debt on GDP per capita from 1987 to 2022. The study used Annual times series data obtained from the World Economic Indicators (WDI) of the World Bank. The econometric techniques of auto-regressive distributive lag (ARDL) method, Augmented Dickey-Fuller (ADF) Unit Root test, and Error Correction Method (ECM) were employed in the empirical analysis. The result of the unit root test showed that the variables had mixed order of integration. Further, the ARDL estimation showed that, in the long run, Nigeriaβs external sector did not exert any significant influence on growth in GDP per capita. However, in the short run, it was established that, while foreign direct investment inflows and external debt positively influenced growth in GDP per capita in Nigeria. Although, exchange rate and official development assistance received were statistically significant in influencing the behaviour of GDP per capita in Nigeria, the relationship was negative. The result further showed that the model was free from the problem of serial correlation, heteroscedasticity, and misspecification error. Finally, the study recommended that, Nigeria should fast-track increased access of FDI to maintain a short run growth of GDP per capita.Β