DETERMINANTS OF ECONOMIC GROWTH IN NIGERIA: AN AUTOREGRESSIVE DISTRIBUTED LAG (ARDL) MODELING APPROACH (STATISTICS PROJECT TOPICS AND MATERIALS)
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.
Economically developed countries have been able to reduce their poverty level, strengthen their social and political institutions, improve their quality of life, preserve natural environments and achieve political stability [Barro (1996); Easterly (1999); Dollar and Kraay (2002a); Fajnzylber,. (2002)]. After the World War II, most of the countries adopted aggressive economic policies to improve the growth rate of real gross domestic product (GDP). The neoclassical growth models imply that during the evolution between steady states; technology, exogenous rate of savings, population growth and technical progress generate higher growth level (Solow 1956).
Endogenous growth model developed by Romer (1986) and Lucas (1988) argue that permanent increase in growth rate depends on the assumption of constant and increasing return to capita1.
Similarly, Barro and Lee (1992) investigate the empirical association between human capital and economic growth. They seem to support endogenous growth model by Romer (1990) that high light the role of foreign direct investment in the growth process. Fischer (1993) argue that long-term growth is negatively linked with inflation and positively correlated with better fiscal performance and factual foreign exchange markets. In the context of developing countries, investment both in foreign direct investment, money supply, and ability to adapt technological changes, open trade policies and low inflation are necessary for economic growth.