ECONOMIC GROWTH AND POVERTY REDUCTION IN NIGERIA: THE ROLE OF INSTITUTIONS
Journal Title: Ilorin Journal of Economic Policy - Year 2020, Vol 7, Issue 1
Abstract
It is worthy of note that the link between economic growth and poverty can be altered in the presence of institutions. The role quality institutions play in economic growth and poverty cannot be overemphasized as it has continued to receive attention from academia and policymakers. Institutions can serve as substitutes or complements in affecting poverty when interacted with economic growth. This study examined the role of institutions in the nexus between economic growth and poverty reduction in Nigeria over the period 1984-2018, using the Autoregressive Distributed Lag cointegration technique. Two institutional quality variables were employed, namely; corruption control and political stability. Poverty was measured using per household consumption, while economic growth was proxied by per capita income. The study found that economic growth and institutions had positive effects on per household consumption in both the short and long run. This implied that as institutions and economic growth increased, per household consumption also increased, while poverty reduced. Furthermore, in the short run, the interactive effect of institutions and economic growth on per household consumption was negative, suggesting that the interaction of institutions and economic growth had a positive effect on poverty. This showed that institutions and economic growth played substitutive roles in poverty reduction in the short run. The interactive effect of institutions and economic growth in the long run was however positive on per household consumption, causing an increase in household consumption and a decrease in household poverty. This showed that institutions and economic growth played complementary roles in reducing poverty in Nigeria in the long run. The study concluded that strong institutions and sound economic growth are important in combating poverty.
Authors and Affiliations
James Temitope DADA*& Oyinkansola FANOWOPO
Keywords
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