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Macroeconomic Volatility, Private Investment, Growth, and Poverty in Nigeria

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  • Addison, Douglas
  • Wodon, Quentin

Abstract

At the time when this paper was written, the latest nationally representative survey implemented in Nigeria dated back to 1996, and the available estimations suggested that two thirds of the population was poor. This high level of poverty was due in large part to macroeconomic volatility that depressed private investment and growth. Using cross-sectional data for 87 countries, we show that real per-capita growth over the period 1980–1994 was a function of productivity growth and investment rates, both of which were negatively effected by volatility (in terms of trade, real exchange rate, and public investments). When comparing Nigeria to high growth nations, we find that most of the growth differential can be attributed to Nigeria’s higher macroeconomic volatility. Simulations suggest that if Nigeria had had lower levels of volatility and better macroeconomic policies, poverty would have been much lower than observed.

Suggested Citation

  • Addison, Douglas & Wodon, Quentin, 2007. "Macroeconomic Volatility, Private Investment, Growth, and Poverty in Nigeria," MPRA Paper 11113, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:11113
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    References listed on IDEAS

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    Cited by:

    1. Arthur Chopkeng Awounang & Maxime Niee Foning, 2014. "Macroeconomic Volatility and Physical Capital Accumulation in Sub-Saharan Africa," International Journal of Economic Sciences, Prague University of Economics and Business, vol. 2014(2), pages 01-19.
    2. Fatima, Amber & Shahbaz, Muhammad & Islam, Faridul, 2012. "Nexus of Trade, Investment and Poverty: Evidence from Pakistan," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 35(2), pages 87-108, June.
    3. Diego Bastourre & Luis Casanova & Alejo Espora, 2011. "Tipo de Cambio Real y Crecimiento: Síntesis de la Evidencia y Agenda de Investigación," IIE, Working Papers 082, IIE, Universidad Nacional de La Plata.
    4. Diego Bastourre & Luis Casanova & Alejo Espora, 2011. "Tipo de Cambio Real y Crecimiento: Síntesis de la Evidencia y Agenda de Investigación," Department of Economics, Working Papers 082, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.
    5. Wodon, Quentin, 2007. "Growth and Poverty Reduction in West Africa: A Brief Overview," MPRA Paper 11086, University Library of Munich, Germany.

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    More about this item

    Keywords

    Poverty; Volatility; Growth; Investment;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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