Abstract
This article examines the determinants of total factor productivity (TFP) in Nigeria over the period 1970–2009. Using error correction model (ECM), impulse-response functions and variance decompositions, the results show that in the long run, human capital, trade openness and inflation have a significant negative impact on TFP. However, foreign direct investment (FDI) has significant positive effect. In the short run, human capital and openness are positively related to TFP, while FDI and unemployment have negative effect on TFP. The results suggest that policies that enhance quality of education encourage intermediate imports and non-oil exports as well as reduce inflation and unemployment will enhance TFP growth in Nigeria.
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