Impact of Institutional Framework on Economic Growth of Nigeria (1996 to 2022)

Abstract

The presence of institutional gaps in the Nigerian economy has enhanced the need to investigate the impact of institutional framework on economic growth from 1996 to 2022. Under the theoretical framework of the endogenous growth model, the dependent variable in this study was economic growth proxied by real gross domestic product while the independent variables of interest were gross fixed capital formation, labour force, research and development and the six indicators of institutional framework (voice and accountability, rule of law, regulatory quality, government effectiveness, control of corruption and political stability. The fully modified ordinary least square was used as the method of analysis and the results revealed that labour force, research and development and regulatory quality have a positive and significant impact on economic growth. Contrary, control of corruption, government effectiveness and gross fixed capital formation have a negative significant impact on economic growth. More so, voice and accountability and rule of law have an insignificant but positive and negative impact on economic growth respectively. Following these findings, this study concludes that institutional framework has a significant impact on economic growth and hence recommends that the federal government should implement extensive institutional reforms that cut across all the arms and levels of government, with emphasis on the autonomy of ministries, agencies, parastatals and commissions to exercise discretion effectively to enhance the implementation of anti-corruption measures, the rule of law and promote good governance practices which in all would foster sustainable economic growth.