Abstract
This research work examined private sector investments and unemployment in Nigeria. The period covered by the study is from 1986 -2016. The study aimed at identifying the impact of private sector investments on unemployment level in Nigeria. Times series data on Private Domestic Investment (PDI), Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI) and Unemployment rate were collected from secondary sources via the Central Bank of Nigeria Statistical Bulletin and World Bank Development Indicators. The Johansen co-integration, analysis, Vector Error Correction (VECM) and Pairwise Granger causality analysis were employed in the data analysis. The Johansen cointegration result indicated the existence of long-run relationship between private sector investment variables and unemployment rate in Nigeria. In the same vein, the Vector Error Correction Model (ECM) estimate equation is properly signed with a negative coefficient of -0.006644 but with an insignificant t-statistic probability value of 0.7376 at 5% significance level. The insignificant t-statistic implies that private sector investments do not granger cause unemployment rate in the long-run. However, a significant but negative relationship was found between past unemployment rate and private domestic investment lagged one period and unemployment rate in Nigeria. The study therefore recommended that sustainable policies that will ensure and encourage growth of private sector investments should be vigorously pursued by stakeholders in the industry. These policies could come in form of access to cheap funds (through reduced interest rates or cost of funds), subsidization of inputs in the production process, tax waivers or newly established firms among other policy initiatives. Keywords: Private Sector, Investments, unemployment rate. DOI : 10.7176/RJFA/10-14-07 Publication date :July 31 st 2019
Highlights
Economic and financial literature has shown that investment is the life-wire of every economy as it propels societal growth and development
It is in recognition of this fact that government of nations whether underdeveloped, developing or developed embark on investment friendly policies geared towards the attraction of investments into their economy
It is worthy of note that the world economy has undergone rapid changes in recent times and developing countries like Nigeria no doubt have made moves to align with these changes in diverse ways which gave rise to different outcomes
Summary
Economic and financial literature has shown that investment is the life-wire of every economy as it propels societal growth and development. According to Udo .(2016), a mixed economy connotes a framework in which allocative mechanism in respect of what is to be saved, invested, produced and at what price, is left to the forces of the market and not to any government or its agency He further noted that in a mixed economy, the private sector should play a leading role while the public sector provides the enabling economic environment. Akram (2016) studied the impact of foreign direct investments (FDI) on both the unemployment rate and economic growth in Jordan using empirical analysis of the times series data from 1998-2015.
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