Domestic investment, capital formation and economic growth in Nigeria

This study evaluates the link existing among domestic investment, capital formation and economic growth in Nigeria. To finance investment for economic growth and development, every economy needs to mobilize capital. The research uses trend analysis and advanced econometrics test to ascertain the significant long-run and causal relationship existing among domestic investment, capital formation and economic growth in Nigeria. The results show that there is (1) Long run significant relationship that exists among domestic investment, capital formation and (2) both domestic investment and gross fixed capital formation granger cause economic growth in Nigeria within the period under study. It is found that gross fixed capital formation has not moved with the growth rate of domestic investment in Nigeria. The study recommends that there is need for government to create enabling environment for domestic investment to thrive through adoption of macroeconomic policies which will create investment opportunities in the economy and contribute to the growth of the economy.