FISCAL FEDERALISM, INSTITUTIONAL FACTORS AND PRODUCTIVITY GROWTH IN NIGERIA ECONOMY

ABSTRACT

This study investigated the impact of fiscal federalism, institutional factor and productivity growth in Nigeria economy using annual time series data for the period 1981-2022. The main objective of this research work is to evaluate the impact of fiscal federalism, institutional factor and productivity growth in Nigeria. In this paper, the Augmented Dickey-fuller (ADF) test was used to test for the stationarity of the variables. The result obtained showed that the variables stationarity status were of a mixed order. Moreover, the ARDL Bound Test Co- 13 integration technique was used to establish if the stationary variables are cointegrated in the long run. Also, the Autoregressive Distributed Lag Model was used as the technique of analysis whereby the long and short run models were estimated. The results so obtained revealed that the model is well specified and could be used for policy analysis. Data used for the analysis were extracted from the Central Bank of Nigeria (CBN) statistical bulletin and the World bank statistical Bulletin. In this study, the effect of expenditure and revenue allocation to each tier of government, institutional factors on productivity growth in Nigeria was examined. Other variables affecting economic growth such as inflation as used in the model are said to contribute negatively to economic growth from the results obtained hence discouraging investment in capital projects. It is therefore evident that if revenue allocation to the federating units in the country is used adequately for development and investment purposes, the country’s productivity growth will improve over time and sustainable development in Nigeria will be achieved in the long run.