INVESTMENT IN ROAD TRANSPORT INFRASTRUCTURE AND ECONOMIC GROWTH IN NIGERIA: A VECTOR ERROR CORRECTION MODEL APPROACH

Abstract

The study examined the investment in road transport and economic growth in Nigeria and used secondary data by employing an ex-post facto research design, using time series data for 1980-2015 on public infrastructure expenditure, exchange rate, and inflation rate measured by the consumer price index. The data were sourced from the Central Bank of Nigeria (CBN) statistical bulletin (2017), National Bureau of Statistics (NBS) and World Development Indicators (2017). Co-integration econometric techniques were applied in the analysis of the long-run equilibrium relationship or co-integration test confirmed the existence of a long-run relationship with Max-Eigen values of two co-integrating equations (Me = 40.98, P<0.05); while the trace statistic values showed three co-integrating equations (t_s = 27.13, P<0.05). The value of -0.21 of the coefficient error correction term suggested that road transport infrastructure investment and economic growth would converge towards its long-run equilibrium at a moderate speed after the fluctuation. The results further revealed that a unit per cent change in road transport investment would positively change economic growth by 0.22 per cent at a 5% significance level.