The Impact of Capital Formation on Economic Growth in Nigeria
Keywords:
Capital Formation, Economic Growth, Effect, Foreign Direct Investment, Total National SavingsAbstract
This paper examined the impact of capital formation on economic growth in Nigeria for the period of 1981 to 2022 using annual time series data on variables such as gross domestic product (dependent variable), gross fixed capital formation, total national savings and foreign direct investment (independent variables). Ex post facto research design was employed for the study and the collated data was sourced from Central Bank of Nigeria Statistical Bulletin, 2022. The data were analysed using E-view version 9. The findings show that gross fixed capital formation, and foreign direct investment have no significant effect on Nigeria’s gross domestic while total national savings have a significant effect on gross domestic product in Nigeria. The study concluded based on the f statistics probability value of 0.0000 which is lesser than 0.05 critical value. Therefore, capital formation has a significant effect on economic growth in Nigeria for the period under review. The study therefore recommends amongst others that Government must increase their efforts in mobilizing the desired level of gross national savings that could be big enough to attract foreign direct investments. This is very vital as FDI will help to complement our domestic savings.
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