Analysis of Macroeconomic Indicators on Economic Growth: Empirical Studies of Nigeria and China

Abstract

Nigeria and China rediscovered themselves in the late 70s and put in place a sustainable economy trajectory to take a leadership position 40 years later. After independence in 1960, Nigeria in the same vein had a strong economic plan, but unfortunately, still revolves around the same position 50 years later. This analysis examines the major development indicators and compares the two countries to appreciate empirical trends and put in place strategic efforts where necessary.

The study focuses on the following macro-economic indicators such as Gross Domestic Product (GDP growth (annual %), AVD= Agriculture, value added (% of GDP), FDI= Foreign Direct Investment net inflows (% of GDP), IFR = Inflation consumer prices annual %), IVD= (Industry Value Added annual % growth), MVD = Manufacturing, Value Added % of GDP), TRD= Trade % of GDP, UMP= Unemployment (% of total labour force). Using a 22-year time series data from 1994-2015, a test of stationarity was done using the Augmented Dickey Fuller (ADF) to determine if the mean and variance of the data are consistent over time as a non-stationary data can be said to give a spurious result. The macroeconomic variables selected for this study were then subjected to the Ordinary Least Square (OLS) towards ascertaining the extent of relationship existing between the macroeconomic indicators selected being a time series data and examine the impact of macroeconomic variables on economic growth. Ordinary Least Square (OLS) was considered appropriate for its ability to deal with economic data. The study therefore concluded with empirical evidences that trends in macroeconomic variables can be used to predict the economic growth of the countries.