Sources of Growth in the Nigerian Economy From 1970 to 2018

Abstract This study investigated the sources of growth in the Nigeria economy from 1970 to 2018 using neoclassical theory of economic growth also known as Solow growth model propounded by Robert Solow (1987). Different diagnostic tests were carried out which include descriptive statistics, correlation, and Ordinary Least Square (OLS). Descriptive statistics were used to examine if the explanatory variables and the dependent variable exhibit leptokurtosis characteristics. The OLS method was used to the models of sources of growth. The study adopted three dependent variables which are gross domestic product per capita (GDPPC), real gross domestic product (GDP) and growth of gross domestic product (GDP_GROWTH) in order to show which definition of growth is or are relevant to Nigeria. Using gross domestic product per capita as the dependent variable, the study found that two variables were statistically significant where both log of gross fixed capital formation and log of labour are statistically significant at 1%. The explanatory variables i.e. gross fixed capital formation and labour are positively related to the growth of gross domestic product in Nigeria therefore, a 1% increase in any of the explanatory variable will increase the growth of the economy by 3.180% and 1.094% respectively. Using real gross domestic product as the dependent variable, the study found that one variable is statistically significant where labour is statistically significant at 1%. The explanatory variables are positively related to the growth of gross domestic product in Nigeria. Therefore, a 1% increase in any of the explanatory variable will increase the growth of the economy by 0.409% and 1.731% respectively. In the same vein, using growth of gross domestic product as the dependent variable, the study found that the two variables are statistically significant where the log of gross fixed capital formation and labour are statistically significant at 1%. The explanatory variables that is gross fixed capital formation and labour are positively related to the growth of gross domestic product in Nigeria therefore, a 1% increase in any of the explanatory variable will increase the growth of the economy by about 1.194% and 1.139% respectively.