Open AccessEffect of Domestic Savings and Investments on Nigeria’s Economy: 1981-2020
Author(s) -
Remigius Chinwoke Ejinkonye,
Ikeotuonye Victor Okonkwo
Publication year - 2022
Publication title -
asian journal of economics, business and accounting
Language(s) - English
Resource type - Journals
ISSN - 2456-639X
DOI - 10.9734/ajeba/2022/v22i930594
Subject(s) - gross domestic product , economics , gross domestic income , gross national income , gross fixed capital formation , per capita , gross private domestic investment , investment (military) , gross output , per capita income , capital consumption allowance , real gross domestic product , measures of national income and output , capital formation , agricultural economics , macroeconomics , gross income , return on investment , economic growth , production (economics) , human capital , public economics , population , law , sociology , open ended investment company , financial capital , political science , state income tax , demography , politics , tax reform
This study assessed effect of gross domestic savings and investments on Nigeria’s economy. The poor economic well-being in Nigeria seems to be caused by poor savings and consequent poor investment. There seems to be weak links among domestic savings, domestic investment and economic growth in Nigeria possibly due to low income, policy inconsistencies, low productivity among others. The general objective of the study was to examine the effect of gross domestic savings and investments on the Nigerian economy for the period 1981-2020. The data used were extracted from the data base of World Development Indicators. Harrod-Domar growth Model and neoclassical growth theory of savings and investments explained the conceptual framework of this study. The unit root test, co-integration test and regression analysis were used for data analysis. Using regression techniques the results showed that there is positive and significant relationship between gross domestic savings and gross domestic product per capita; there is negative but significant relationship between gross domestic investment and gross domestic product growth rate per capita; there is positive and significant relationship between gross domestic savings and adjusted net national income per capita; and there is negative but significant relationship between gross domestic investments and adjusted net national income per capita in Nigeria. Thus, gross domestic savings and investments contributed to economic growth and development in Nigeria. The work recommended that the Nigerian monetary authority should sustain the monetary policy rate between 11% and 12% and encourage savings deposit rate to be between 1.5% and 2.5%; and investment environment should be conducive through policy consistency from the Government; and that capital flight need to be curbed by improving ease of doing business in Nigeria by streamlining business registration process, and ensuring enforcement of national digital policy.