IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 5 NO. 3 2019

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Economic Growth, Inequality and Poverty in Nigeria, 1980-2016

Saheed Aliu, ALADEJANA, John Adejare, ALABI AND Saudat Adewumi, BOLAJI

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Abstract

The link between economic growth, inequality and poverty has been widely debated in the literature. This has affected the economy of developing countries in which Nigeria inclusive. This study examined the relationship between economic growth, inequality and poverty in Nigeria. The study used time series data from World Development Bank and Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics (NBS) from 1980 to 2016. The study employed Fully Modify Ordinary Least Square (FMOL) methods, unit root test and granger causality test .The unit root test showed that the variables were stationary in the short run and co-integration test confirmed a long run relationship between the variables. The Granger causality result showed that only poverty rate (POV) granger cause gini coefficient (GINI). Poverty rate (POV) and trade openness (OPEN) established uni-directional relationship in the estimated model in Nigeria. The R-squared (R2) showed that forty-one percent (41%) changes in variations in Real Gross Domestic Product were explained by the predictor variables in the model. The results showed a positive relationship between trade openness and the real gross domestic product in Nigeria. This implied that a one percent (1%) increase in trade openness bring about 17% rise in real gross domestic product in Nigeria. The study concluded that inequality increased poverty level and at the same time increased economic growth during the study period. Also poverty had positive effect on income inequality. Therefore, policies that will reduce inequality will also reduce poverty and vice versa. It is therefore recommended that for the economy to experience growth, inequality must be comprehensively addressed as this will subsequently reduce poverty. Moreover, more emphasis on basic education will help to address the twin monster of inequality and poverty.

keywords:

Economic growth, inequality, poverty rate in Nigeria

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