Nexus Between Savings and Economic Growth in Nigeria: An Econometric Analysis

Abstract

This study examined the nexus between savings and economic growth in Nigeria. The close connection between savings and economic growth has been a key issue in economic literature. However, the fact that differences in saving rates of different countries could be explained by their differences in the rate of economic growth cannot be overemphasized. This is due to the fact that achieving a higher level of economic growth requires higher level of investment, and investment is made possible by another variable called savings. The analytical framework of this study is based on econometric methodology encompassing the error correction model of regression analysis using data from 1980 to 2023. The researcher employed the Granger Causality test and cointegration technique to analyze the nexus between savings and economic growth in Nigeria within the period under review. The empirical results showed a long-run positive relationship between savings and economic growth in Nigeria. Thus, the researcher recommended that government should make policies that would encourage long-term savings so as to accelerate economic growth in Nigeria.