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Article
Foreign Private Investment, Capital Formation and Economic Growth in Nigeria: a two stage least square approach
Journal of Economics and Sustainable Development (2011)
  • ANTHONY ORJI
  • Peter Nwachukwu Mba
Abstract

This work studies the relationship between foreign private investment, capital formation and economic growth in Nigeria using the two-stage least squares (2SLS) method of estimation. The study finds that the long run impact of capital formation and foreign private investment on economic growth is larger than their short-run impact. There is thus, a long-run equilibrium relationship among the variables as the error correction term is significant, but the speed of adjustment is small in both models. The two stage least squares estimates are very close to the OLS estimates suggesting that OLS estimates are consistent and unbiased. Hence, endogeneity was not a problem in the estimated models. There is therefore no simultaneity between GDP growth and capital formation model. These findings therefore have some policy implications as discussed in the work.

Keywords
  • Foreign Private Investment; Investment; Economic Growth;Capital Formation;Credit
Publication Date
Summer July 25, 2011
Citation Information
ANTHONY ORJI and Peter Nwachukwu Mba. "Foreign Private Investment, Capital Formation and Economic Growth in Nigeria: a two stage least square approach" Journal of Economics and Sustainable Development Vol. 2 Iss. 2 (2011)
Available at: http://works.bepress.com/anthony_orji/4/