An analysis of the poverty-growth –inequality –nexus in nigeria- 1992-2010

Project Abstract

This research study examines the poverty-growth-inequality nexus in Nigeria from 1992 to 2010. Nigeria, as the largest economy in Africa, has experienced significant economic growth over the past few decades. However, this growth has not been inclusive, and poverty rates remain high, with a large portion of the population living below the poverty line. Income inequality has also been a persistent issue in the country, with a small segment of the population holding a disproportionately large share of the wealth. The study utilizes a comprehensive dataset from various sources, including the National Bureau of Statistics (NBS), World Bank, and other relevant sources, to analyze the relationship between economic growth, poverty levels, and income inequality in Nigeria over the specified period. The research employs quantitative methods such as regression analysis and descriptive statistics to explore the dynamics of poverty, growth, and inequality in the country. The findings of the study reveal a complex interplay between economic growth, poverty reduction, and income inequality in Nigeria. While the country has experienced periods of economic growth, this has not always translated into significant poverty reduction or reduced income inequality. The analysis indicates that the benefits of economic growth have not been evenly distributed, leading to a situation where a significant portion of the population remains in poverty while a small elite enjoys a disproportionate share of the wealth. Furthermore, the research highlights the need for targeted policy interventions to address the challenges of poverty and inequality in Nigeria. The findings suggest that simply focusing on economic growth may not be sufficient to tackle these issues effectively. Instead, a more nuanced approach that considers the specific drivers of poverty and inequality in the country is essential. Overall, this study contributes to the existing literature on the poverty-growth-inequality nexus in developing countries, with a specific focus on Nigeria. By providing empirical evidence and insights into the dynamics of poverty, growth, and inequality in the country, the research aims to inform policymakers and stakeholders on the most effective strategies to promote inclusive growth and reduce poverty and inequality in Nigeria.

Project Overview

<p> The issue of poverty is posing serious threat to the development of the Nigerian economy. Growth was seen as the driving force for poverty reduction by studies carried out in the 1980s. But, recent attention has now been shifted to the role of income distribution in reducing poverty since the yield of growth may not be equally shared and poverty not reduced. However, a distinct conclusion is yet to be established on the role of inequality in poverty reduction. Analysis on Poverty growth and inequality has received much attention among scholars, both in Nigeria and various other economies of the world. However,there seems to be a gap in literature on the flow of the triangle and the possibility of the previous levels of poverty, growth and inequality influencing the relationship of the triangle. Therefore, this research investigated the poverty- growth-inequality-nexus in Nigeria, using state data for 1992 to 2010 in a four year round panel framework. The study employed a dynamic simultaneous equation model while the Fixed Effect, Panel Least Square, First Difference Generalized Method-of-Moments and the System Generalized Method-of-Moments (GMM) econometric estimation techniques were used in the estimation of the model. The result from the study proved the System Generalized Method-of-Moments of estimation to bethe best approach in analyzing the interaction among poverty growth and inequality in Nigeria rather than the other methods.The result of the empirical study revealed that growth is positively and significantly related to poverty andthere was a negative and significant effect of income inequality on poverty. Poverty was found not to have any significant effect on growth and inequality. Poverty was positively related to growth and negatively related to inequality. The result of the study further showed that there is a positive feedback relationship between growth and inequality. States with high previous poverty levels tend to experience higher present levels of poverty and states with high previous levels of growth tend to experience higher present level of growth. The result of the study also showed that unemployment and literacy rates were critical determinants of poverty levels. Deliberate effort of the government in redistributing income is highly recommended to ensure poverty reducing impact of growth in Nigeria. Also, the need for unemployment reduction as a major part of policy measures aimed at poverty reduction in Nigeria is highly recommended for effective poverty reduction in Nigeria. <br></p>