A CRITICAL ASSESSMENT OF THE DETERMINANTS OF INVESTMENT IN NIGERIA


A CRITICAL ASSESSMENT OF THE DETERMINANTS OF INVESTMENT IN NIGERIA

ABSTRACT

In recent times there has been growing concern about the rising but volatile rate of investment in Nigeria. This concern stems from the fact that investment play a dominant role in stimulating growth. The study buttress on the overview and empirical analysis into the determinants of investment in Nigeria. In order to achieve the objectives hypothesis was stated with the purpose of achieving current and future stable upswing of investment by re-addressing problem of investment as highlighted in the statement of the problem. The study used investment as the dependent variable and government expenditure, tariff , real interest rate and capital stock as the independent variable. In analyzing the data, economic model of multiple regression using ordinary least square (OLS) technique was employed. That t-test conducted indicates that government expenditure, tariff and real interest rate. Not statistically significant at 5 percent level. Normality test and heteroscedaticity test were employed as the second order test.

INTRODUCTION
Investment is the commitment of resources made with the hope of realizing benefits which are expected to occur
over a reasonably long period of time. It is an economic activity where an individual, group or government buys
assets with the hope of receiving adequate risk premium (returns) overtime.

According to Vaish (2007) investment is the change in capital stock during a period. Consequently, unlike capital,
investment is a flow and not a stock term. This means that capital is measured at a point in time, while investment
can only be measured over a period of time. Investment is a net tangible property of human being and of institutional
arrangement capable of rendering services to consumers and producers of a nation (Ogoke, 2002). This implies the
profitable postponement of consumption to the future. Such greater consumption expectation is only attained if the
resources committed yield benefits as per the opportunity cost of the capital. It could also mean the production of
capital goods: goods which are not consumed but instead used in future production. Determinants

Ideally, investments exist in two forms; namely: capital (real) and financial investment. Capital investment concerns
itself with tangibles which convenants and crystallize into projects or collection of assets, single assets or fixed assets

such as machines, building etc. This, in other words, is also total expenditure on new plant and equipment that is
mostly taken with the aim of reducing cost and producing goods to generate future benefits. On the other hand,
financial investment refers to investment in securities such as shares, bonds, financial instruments that are referred to as “IOUs”, documents of claims economic agent have on others. Determinants

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