Gross Investments and Economic Growth in Nigeria 1970–2014: An Empirical Analysis

Effective investment plays an important role in the attainment of major macroeconomic objectives of the Federal Government of Nigeria. It then implies that a reduction in investment reduces aggregate demand and slows down productive activities in the economy. The study examined the contribution of gross investments to Nigeria’s economic growth from 1970 – 2014. The Unit root test, Johansen Co-integration test and Error Correction Model were employed to test the impact of gross investments on economic growth in Nigeria. Based on the results from these tests, the following recommendations were made: the activities of the Capital Market should be effectively regulated by the Securities and Exchange Commission so as to increase the confidence of foreign investors; effective monetary policies to control inflation, achieve real interest rate and ensure exchange rate stability should be implemented by the CBN so as to encourage private investment; the Federal Government of Nigeria should provide adequate infrastructural amenities and reduce the level of insecurity in the country to encourage more inflow of foreign direct investment.