Effect Of Sustainable Infrastructural Development On Economic Development Of Nigeria

Effect Of Sustainable Infrastructural Development On Economic Development Of Nigeria

Abstract

The impact of sustainable infrastructure development on Nigeria’s economic development is the subject of this study. The impact of sustainable infrastructure on Nigeria’s gross domestic product (GDP) was studied by the researcher. Infrastructure development’s effects on Nigeria’s Gross Fixed Capital Formation (GFCF). Examine the effect that infrastructure development has on the expansion of Nigeria’s economy. Data for the study was gathered from the CBN Annual Report and relevant journal articles. Using SPSS, the data that was gathered was examined. The study’s findings indicate that The results shown in the coeficiente showed that the estimated t-statistics for the parameter GDP (t = -2.723) are greater than the tabulated t-statistics at the 0.05 level of significance. The regression equation also showed that for every rise in infrastructure costs, GDP decreased by -0.881 units. Infrastructure costs account for 92% of the variation in GDP growth, according to the coefficient of determination (R2) of 0.921. At the 0.05 level, there is a strong, positive, and statistically significant association (r=0.960) between GDP and infrastructure spending. The overall goodness of fit of the regression model is statistically significant (f = 12.22, p 0.05). As a result, the study accepts the alternative hypothesis, which states that Nigeria’s GDP is impacted by sustainable infrastructure. Additionally, it was shown that Nigeria’s Gross Fixed Capital Formation (GFCF) is significantly impacted by the growth of the country’s infrastructure. According to the research’s conclusions, Nigeria will need to increase its infrastructure development funding in tangible capacities by 24% of GDP over 10 years or 18% of GDP over 15 years to catch up with most Asian nations if it wants to achieve significant accelerated development over the next 10 to 15 years. Naturally, this is predicated on the premise that Asian nations will continue to experience modest annual growth rates of 6%, with infrastructure investment continuing in the 6% to 7% range on average.

Chapiter 1

Introduction

1.1 The study’s context

The achievement of sustainable economic growth continues to be a top priority for every nation. Increasing domestic productivity is a key factor needed for reaching this goal. To do this, the nation must be able to generate enough domestic physical capital to support the needed economic growth. To put it another way, fixed capital development is a significant driver, catalyst, and determiner of an economy’s growth.

According to the World Bank (2014), gross fixed capital formation (GFCF) is the accumulation of fixed assets such as land improvements, equipment, machinery, the construction of roads and railroads, the building of schools, etc., needed to increase a country’s economic productivity. The Romer (2008) and Lucas (2007) Growth Models stipulate that higher growth rates can be attained via increasing capital accumulation, and this definition restates and reflects their predictions. Additionally, increased educational enrollment rates brought on by school construction will raise the standard of human capital. The improvement of human capital in this area will guarantee creativity, innovation, and increased economic production. The efficiency of labor productivity will also improve with the investment in machinery and equipment. Additionally, capital creation was defined by Bakare (2011) as the “proportion of present income saved and invested in order to increase future output and income”. This concept supports the idea that saving is a crucial component for generating (GFCF) and accelerating economic growth. Thus, it may be said that a nation with a low domestic marginal propensity to save will probably have weak capital formation, which may limit economic growth, and vice versa. This is due to the lack of a significant pool of loanable money in such a country for domestic investment in physical capital. More crucially, the availability of high-quality physical capital draws inflows of foreign direct investment (FDI), a crucial macro-economic factor required to boost a nation’s economic success. In a broader sense, capital formation in the context of financial economics refers to savings initiatives, the creation of secondary markets for capital, as well as the privatization of financial institutions (Ray, 2013). According to Ray (2013), GFCF eventually leads to more output, which raises share prices and boosts profitability, which has a beneficial knock-on effect on a nation’s economic growth. Based on the debate so far, it seems logical to conclude that greater fixed capital formation is a necessary prerequisite for assuring and strengthening sustainable economic growth. The goal of this study is to determine how sustainable infrastructure development affects economic growth in Nigeria.

1.2 Definition of the Issue

Nigeria’s infrastructure has undergone increased change in recent years as a result of the construction of more schools, roads, telecommunications facilities, ect. Only a small number of studies have, however, looked at how these infrastructure improvements affect Nigeria’s economic progress. By examining the impact that infrastructural development has on Nigeria’s economic growth, this study hopes to supplement other research already done in the field.

1.3 Study’s objectives

Examining the impact of sustainable infrastructure development on Nigeria’s economic development is the goal of this study project. The following are some of the specific goals of this research project:

1. To assess how sustainable infrastructure affects Nigeria’s gross domestic product (GDP).

2. To assess how infrastructure development affects Nigeria’s Gross Fixed Capital Formation (GFCF).

3. To investigate how infrastructure development affects Nigeria’s economic expansion.

4. To determine whether infrastructure improvement and economic expansion in Nigeria are causally related.