Open AccessInstitutional Quality and Industrial Growth: A Causality Analysis
Author(s) -
Awoyemi Olayiwola Babasanya,
Oluwaseyi Adedayo Adelowokan,
Florence F. Oyebamiji
Publication year - 2021
Publication title -
asian journal of education and social studies
Language(s) - English
Resource type - Journals
ISSN - 2581-6268
DOI - 10.9734/ajess/2021/v24i330579
Subject(s) - language change , accountability , causality (physics) , institution , government (linguistics) , granger causality , economics , rule of law , quality (philosophy) , politics , financial institution , index (typography) , macroeconomics , economic system , public economics , political science , law , econometrics , art , linguistics , philosophy , physics , literature , epistemology , quantum mechanics , world wide web , computer science
The research study investigates the causal links between institutional quality and industrial output growth in Nigeria for the periods 1996:Q1-2018:Q4. Institutional quality was delineated into three i.e. economic institution (government effectiveness, regulatory quality, rule of law, and control of corruption), financial institution (contract intensive money, lending rate, and financial deepening), and political institution (voice and accountability, and political stability and absence of violence). The study computed the Granger causality test using both the VECM and the Toda and Yamamoto [1] and Dolado and Lutkepohl [2] (TYDL) augmented VAR procedure. The causality result in the short run showed that none of the institutional quality variables have a causal effect on industrial output growth but the feedback was reported. In the long run, a bi-causal relationship was reported from government effectiveness, control of corruption, financial deepening, and voice and accountability to industrial growth, whereas, a one-way directional relation was found running from industrial growth to regulatory quality and political stability & absence of violence. Thus, there is a need for the government to intensify efforts towards improving the extent people can challenge her power and authority because these play significant roles in the development level of Nigerian industries.