Abstract:

Enhanced and sustainable growth has remained a major economic objective of most national economies, including Nigeria. To this end, economic managers manipulate a mix fiscal and monetary policy tools to facilitate the growth process. The imperative for rapid economic growth has not only been of great concern to global institutions and agencies but dominates discussions at major economic meets at different national and international platforms. The depth of academic research in this area of knowledge is also an indication of its relevance in the life of a nation. To contribute to the body of knowledge in this field of study, this paper examined the drivers of economic growth in Nigeria based on annual data on selected performance indicators between 1981 and 2017. On account of theoretical justification, the study analyzed how dynamics in exchange rate, gross fixed capital, inflation rate, crude oil price and financial sector development support the economic growth. Analysis of the time series properties of the data showed stationary trend for all the variables at their first difference. The ordinary least squares (OLS)-based estimation showed that movements in exchange rate and gross fixed capital catalyze growth while financial development (proxied as credit to the private sector in relation to gross domestic product) retards capacity for growth. The result further showed weak negative effect of inflation as well as weak positive effect of crude oil price on Nigeria economic growth. Based on the above outcome, it is advised that policies on exchange rate and capital formation be reinforced to consolidate growth while policy reform is advocated to enhance credit delivery to the private sector and limit the growth-impeding effect of inflation.