Macroeconomic Determinants of Private Sector Investment - An Ardl Approach: Evidence from Nigeria

Ayeni, Raphael Kolade

Ekiti State University, Ado Ekiti, Nigeria

Email: raphayeni@gmail.com

Accepted 12 February 2014

Abstract

Over the years, it has been understood that the Nigerian economy will require amongst other things an increase in private sector investment in other to attain meaningful, efficient, and sustainable growth. However, this study investigated the determinants of private investment in Nigeria for past decades. The ARDL (Autoregressive Distributed Lag) Co- integration approach is employed to check the existence of a long run relationship as well as a short run dynamics of private investment in Nigeria. The result suggests that the determinants of private investment used in this study i.e. Aggregate Demand Condition in the economy (GDP), Real Interest Rate, Real Exchange Rate, Inflation Rate, and Credit to Private Sector has not been able to contribute effectively or boost private investment in Nigeria. However the study therefore suggests that the government, while improving the macroeconomic conditions conducive to boost investment, should also create a conducive political environment to boost private sector investment.

Keywords: Private Investment, Aggregate demand, Credit to Private Sector, ARDL