Globalization and capital formation in Nigeria

Benedict Ikemefuna  Uzoechina; Precious Chidinma  Okafor; Ngozi Florence  Ezenwobi; Geraldine Amaka  Ekwoh; Chika Maureen  Okaforocha; Ndubisi John  Edeh

doi:10.59400/fefs.v2i2.1133

Benedict Ikemefuna Uzoechina Department of Economics, Nnamdi Azikiwe University, Awka 420102, Anambra State, Nigeria
Precious Chidinma Okafor Department of Economics, Nnamdi Azikiwe University, Awka 420102, Anambra State, Nigeria
Ngozi Florence Ezenwobi Department of Economics, Nnamdi Azikiwe University, Awka 420102, Anambra State, Nigeria
Geraldine Amaka Ekwoh Department of Economics, University of Nigeria, Nsukka 410101, Enugu State, Nigeria
Chika Maureen Okaforocha Department of Economics, Nnamdi Azikiwe University, Awka 420102, Anambra State, Nigeria
Ndubisi John Edeh Department of Economics, Nnamdi Azikiwe University, Awka 420102, Anambra State, Nigeria

Article ID: 1133

274 Views, 198 PDF Downloads

DOI: https://doi.org/10.59400/fefs.v2i2.1133

Keywords: trade; trade globalization; economic growth; financial globalization; foreign direct investment; capital stock

Abstract

No country can achieve sustained economic growth without substantial investments in capital formation. Nigeria is rich in natural resources, but due to inadequate capital and technology, these resources have not been fully tapped and maximized. This study seeks to provide another gateway to unlocking the dearth of capital formation for development by specifically investigating the impact of financial and trade globalization on capital formation in Nigeria within the period 1990–2022. The autoregressive distributed lag (ARDL) technique was adopted for data analysis. The findings of this study indicate that while trade globalization has a negative effect on capital formation in both the long run and short run, respectively, financial globalization exerts a negative effect on capital formation in the long run but a positive effect in the short run. Nevertheless, financial and trade globalization exert detrimental effects on capital formation in the long run. A major policy recommendation is that Nigeria should play a key role in the African Continental Free Trade Area in order to boost her trade and financial competitiveness within Africa and so be able to lunch herself into the global space and thus tap the potential benefits of trade and financial globalization.

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