CO INTEGRATION: APPLICATION TO THE ROLE OF INFRASTRUCTURES ON ECONOMIC DEVELOPMENT IN NIGERIA

Abstract

The study appraised the role of infrastructure on economic development in Nigeria measured by the gross domestic product while the infrastructure is measure with the capital expenditure on Transportation & communication (TRC), Education (EDU) and Health (HLT) respectively for a period of 32 years (1981-2013). Using least square (OLS), we find out that, the measure of coefficient of determination shows that about 95.11% of variation in GDP can be explained by infrastructure. The regression model explain that a unit increase in Transport &Communication(TRC) and Education(EDU) will increase GDP by 237% and 174% respectively, while the Health(HLT) will reduces the GDP by 31%. The residual of the regression model is stationary, when subjected to the unit root test and the Johansen co integration test show that two of the equation is co integrated. From this, it can be affirmed that the regression model are not spurious. The co integrating equation also suggesting that the GDP adjust to change in capital expenditure on infrastructures in the same time period and shows that short-run change in TRC and EDU have negative impact on short-run change in GDP but only HLT has positive impact on GDP in the short run.

Keywords: Co-integration, Economic Development, Infrastructure, Regression Model


Article Review Status: Published

Pages: 35-41 (Download PDF)

Creative Commons Licence
This work by European American Journals is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License