The Determinants of Domestic Private Investment in Nigeria

Abstract

This study focalize the private domestic investment. The choice is to enable us study the implications of the policy shift of Nigerian government that placed emphasis on private sector as an engine of growth. The policy makers believe that private investment has a stronger and more favorable effect on growth than public investment, probably because private investment is more efficient and less closely associated with corruption. This study however analyzed the determinants of private investment in Nigeria using a time series data and an error correction mechanism. The paper discussed the trends in investment and also reviewed the literature on the topic. Empirical investigations showed that changes in real private investment in Nigeria are best explained by changes in political trend by a dummy variable representing political instability; macroeconomic instability and poor infrastructure. The econometric results suggested that political crises may have created a climate hostile to private investment in Nigeria. The overall measure of political and macroeconomic instability has been a major hindrance to private investment. The results suggested the need for the government to continue to develop the infrastructural