Stock Market Performance and Sustainable Economic Growth in Nigeria: A Bounds Testing Co-integration Approach

The study examined the relationship between stock market performance and economic growth in Nigeria. It utilized the bounds testing co-integration procedure also known as autoregressive distributed lag estimation procedure. The empirical model combined key stock market indicators and some traditional macroeconomic variables to estimate the hypothesized relationship in the study. It found that in the long-run, overall output in the Nigerian economy is less sensitive to changes in stock market capitalization as well as the average dividend yield thereby casting doubt on the ability of the Nigerian stock market in its present level of development to serve as a barometer for measuring or predicting the overall health of the Nigerian economy as well as its direction over the long-run horizon. The other major finding in the study is that the long-run growth of the Nigerian economy is highly sensitive to marginal variations in interest rate which is suggestive that macroeconomic variables in the country are at present more useful in shaping the long-run direction of the Nigerian economy

Is There A Link Between Financial Sector Development and Economic Growth in Nigeria?

There is no consensus in the empirical literature on the causal links between financial sector development and economic growth. This paper investigates the long run and causal relationship between financial sector development and economic growth in Nigeria for the period 1981 to 2011 using time series data. Results from a multivariate VAR and vector error correction model support evidence of long run relationship between financial sector development and economic growth in Nigeria. Granger causality test results also confirm the cointegration results indicating there exists causality between financial sector development and economic growth in Nigeria. The nature of the causality however depends on the variable used to measure financial development. The results demand that government should implement appropriate regulatory and macroeconomic policies to consolidate on the gains of previous financial sector reforms

FOREIGN DIRECT INVESTMENT, NON-OIL EXPORTS, AND ECONOMIC GROWTH IN NIGERIA: A CAUSALITY ANALYSIS

The study examines the contribution of Foreign Direct Investment (FDI) to the performance of nonoil exports in Nigeria within the framework of the export-led growth (ELG) hypothesis. Available evidence in Nigeria supports that the bulk of FDI inflow into the country goes to the oil sector of the economy. From the perspective of efficiency-seeking FDI, foreign capital always aims at taking advantage of cost-efficient production condition. Given this fact, a causality analysis was undertaken in order to verify the relevance of the ELG hypothesis. Also, the dynamic interaction among FDI, non-oil exports, and economic growth is investigated using the concept of variance decomposition and impulse response analysis. The results obtained from the causality analysis revealed that a unidirectional causality runs from FDI to non-oil exports. Each of the three variables exhibited on the average and at the early stages of the out-of-sample forecast period, a dormant response to one standard deviation shock or innovation. However, they all demonstrated significant responses after some 7 years into the out-of-sample forecast period. The results also show that an encouragement of non-oil exports is a necessity for an effective FDI in Nigeria. Therefore, in designing policies towards this direction, policy response lag need to be taken into consideration

Petroleum, the Environment, and the Economics of Nationalism in the Niger Delta

The Niger Delta conflict has come into global limelight for some time. The peoples have been agitated over the sordid acts of ecocide by the oil multinationals, resulting from oil explorations without expected economic vantages and physical development in turn. The recent occurrences of militia formations, their attacks of oil installations and kidnap of expatriates working in the oil wells, have added an interesting but dangerous twist to the crisis in the region. This paper curiously questions the failure of government to tackle the environmental issues that have culminated in the dangerous twist of nationalism, and counts the economic costs of this on Nigeria. The major recommendations in this study include- the consideration of people-based interests in the conduct of Nigeria’s foreign policy, and the shifting of presidential power to the oil-producing states, which have never produced Nigeria’s presiden

Migrant Workers' Remittances and External Trade Balance in Sub-Sahara African Countries

Workers’ remittances represent a major source of private external finance for many developing countries. Moreover, these flows which have been on the upward trend in recent times are now widely regarded as important financial flows to many developing countries that receive them in large quantity. One major concern about remittances is that in countries receiving significant flows, the local currencies could appreciate artificially due to over-valuation; this might in turn be harmful to the overall trade balance and long-run economic growth of the receiving economies.This study investigates the possibility of this phenomenon in some selected Sub-Saharan African countries. The hypothesized link between workers’ remittances and external trade balance was specified in a linear dynamic panel data model and estimated using the system Generalized Method of Moments.A major finding shows that remittance inflows have a contemporaneous negative but statistically insignificant impact on external trade balance across the sampled countries. This result suggests that remittance flows may not be helpful in promoting the goal of maintaining a sustainable external trade balance in the selected SSA economies

ECONOMETRIC ANALYSIS OF EXPORTS AND ECONOMIC GROWTH IN NIGERIA

There is no consensus in the empirical literature on the causal links between exports and economic growth. This paper therefore examines the applicability of the Export-Led Growth hypothesis for Nigeria using annual secondary time series data from 1970-2010. The estimation results obtained from the cointegration test and Granger Causality test within the framework of a VAR model did not support the Export-Led Growth hypothesis for Nigeria. The paper concludes that government must diversify the product base of the economy, promote non-oil exports, and build up an efficient service infrastructure to drive private domestic and foreign investment

The Role of The Nigerian Stock Market in Achieving Vision 2020

The ultimate aim of vision 2020 is to improve the standard of living of the average Nigerian. This paper examined the role of the stock market in achieving the vision 2020. Applying co-integration and error correction modeling to stock market performance and per capita income time series data, this study has helped in highlighting the specific roles of major indicators of the capital market which are relevant in testing the capital market-economic growth nexus. The findings indicate the separate roles played by the primary capital market and the secondary capital market in the growth of the Nigerian economy. The evidence from this study revealed that while activities in the secondary capital market tend to grow the Nigerian economy through its wealth effect that of the primary market ironically did not

Environment and the Economics of Nationalism: Revisiting the Oil Issue and the Restless Run of Locusts in the Niger Delta

The Niger Delta crisis has, in very recent times, taken a dangerous dimension, underscoring the degeneration of the issue due to the failure of the government at all levels, and other non-state actors, including multinational companies (MNCs), to bring the crisis to an end. The emergence of militias and cult groups in the last three years points to the aggravation rather than the resolution of the conflicts. The government’s seeming complicity in protection of the MNCs, using instruments of state force to protect foreign companies, has multiplied illegal means and instruments to fight the cause of "economic and social emancipation", as some militants claimed in February 2007 in an interview by Jeff Koniange of the American Cable News Network (CNN). This study examines the protracted Niger Delta crisis, exacerbated by oil, ecological and socio-ethnic factors, and its implication for Nigeria's external relations. It does this by revisiting the many unresolved issues, including the Ogoni crisis, which explain the escalation of the crisis