DOES CORRUPTION MATTER FOR NIGERIA LONG RUN GROWTH: EVIDENCE FROM COINTEGRATION ANALYSES AND CAUSALITY TESTS?

The study examines the relationship between corruption and economic growth in the Nigeria economy for sample periods ranging from 1970 to 2004. Johansen’s maximum likelihood cointegration techniques and Granger causality tests were applied to annual, national-level data. The results of this study indicate that corruption is cointegrated with Economic growth in Nigeria. In addition, for Nigeria, the study found a one-way causality from corruption to economic growth. These findings provide a statistical confirmation of unfavorable effects of corruption on economic performance as widely hypothesized in economic literature. For policy, the results of this study suggest that the current anti corruption drive in the country should be more vigorously pursued as this result indicated that it has important consequence on economic growth aspirations of the country.