Infrastructure Development and Economic Growth in Nigeria: Evidence from an Autoregressive Distributed Lag Model

Abstract

Infrastructure is widely seen as a driver of growth, yet much of the evidence for Nigeria rests on series that mix nominal and real magnitudes. This study examines how public infrastructure spending on transport, education and health is associated with real economic growth in Nigeria over 1990-2022, controlling for the labour force, gross capital formation and the 2001 liberalisation of the telecommunications sector. All monetary series are expressed in constant 2010 Naira. The analysis combines unit-root tests (Augmented Dickey-Fuller, Phillips-Perron, Zivot-Andrews), the Autoregressive Distributed Lag bounds test with critical values simulated for the available sample size, Johansen cointegration tests on the integrated variables, and Toda-Yamamoto causality tests. After deflation, the evidence for a long-run relationship is weak: the bounds F-statistic falls in the inconclusive region and the coefficient on lagged real GDP is not negative, so long-run elasticities are not interpreted. In a first-difference growth model, none of the infrastructure variables is significantly associated with real GDP growth at the 5 percent level, and Toda-Yamamoto tests indicate that real GDP precedes spending on education and health rather than the reverse. The results caution against reading associations obtained from current-price data as evidence of an infrastructure-growth link, and suggest that spending volumes alone are a poor guide to growth outcomes. Policy implications are drawn from the literature, not from the estimates.