Dynamic linkages between government-interventionists’ policies, growth, inequality and poverty in Nigeria

Abstract

The inward-looking development strategy adopted by the Nigerian government; coupled with economic mismanagement and massive corruption, led to slow economic growth rate and a high level of poverty in the country. To address these problems, the government  mplemented a number of interventionist policies (poverty alleviation measures). This article examines the relationship between these interventionist policies, growth, inequality, and poverty. Empirically, the paper examines the impact of these phenomena on poverty using VAR methodology and Granger Causality test. The descriptive analysis shows that the various poverty- alleviation programmes have no significant positive impact on economic growth and poverty. The empirical analysis shows that income inequality tends to amplify the problem of poverty. The results show that income inequality, income growth, and government capital expenditure are major drivers of poverty in Nigeria. Drawing from the above, the study concludes the level of inequality needs to be reduced to achieve increased economic growth rate and a reduction in poverty level. Moreover, government should put in place macroeconomic and social measures that could directly reduce income inequality, encourage more business operations and promote growth.