The Effects of Macroeconomic Indicators on Economic Growth of Nigeria (1970-2015)

Abstract

According to World Bank statistics reported in 2016, the Gross Domestic Product per capita (RGDP) in Nigeria was 2,548.20 United States Dollar (USD) in 2015. Also, Nigeria's highest ever GDP recorded was 568.508 billion USD in 2014, with this exceptional growth in the economy, the World Bank and National Bureau of Statistics (NBS) and Central Bank of Nigeria (CBN) forecast GDP for 2016 to be very high but unfortunately, the GDP published by NBS and CBN as at June 2016 was 22.26 billion USD, which was the lowest ever since returning to democracy in 1999. This sharp fall in GDP reduced Nigeria GDP per capita drastically. It is based on this we employed Dynamic Multiple Linear Regression Model to fit a model of RGDP of Nigeria using some world development indicators as explanatory variables. Data was collected from 1970 to 2015 from World Bank database and National Bureaus of Statistics (NBS) on the six World Development Indicators (WDI), total Import, official exchange rate, broad money, inflation rate, total natural resources rents and foreign direct investment. The dynamic weighted least square (DWLS) was used rather than the dynamic ordinary least square (DOLS). The result of the analysis shows that imports of goods and services positively affect RGDP of Nigeria significantly, while other explanatory variables negatively affect RGDP significantly. Based on this result, we recommend that rather than closing boarder to imports of goods and services, we need to restructure the economy, so that, Nigerian made goods can compete favorably with the imported goods and services, thereby reduce importation naturally instead of forcefully halt importation.