An Empirical Analysis Of The Impact Of Selected Macroeconomic Aggregates On Capital Formation In Nigeria (1975 – 2002).

Abstract

This study is carried out to provide an insight into the analysis of the impact of selected macro-economic aggregates on capital formation in Nigeria. The study takes a systematic approach to the subject matter by first devoting separate section to state objectives as well as the methodology. Also, a review of the various literatures was carried in section two where various macroeconomic aggregates policy option was critically appraised. In section three, an empirical assessment of selected macroeconomic aggregates was carried out where the ordinary least square regression method was applied. In the empirical analysis, the dependent variable is gross Domestic product, domestic credit to the economy and lending rate of interest. In the analysis, it was observed that the most significant variable determining changes in Gross Capital Formation is Gross domestic product (GDP). The study also found that domestic credit to the economy was significantly related to Gross Capital formation but having negative impact on capital formation. Also, certain recommendations were put forward which include, well managed exchange rate regime, so that import is not subsidized relative to domestic production. Government should provide an enabling environment by ensuring that the political economy is stable.


Journal of Research in National Development Vol. 4 (1) 2006: pp. 103-115