E3 Journal of Business Management and Economics

E3 Journal of Business Management and Economics Vol. 2 (2) pp. 059-068, August 2011; © E3 Journals; ISSN 2141-7482

The Crowding-Out Effects of Corruption in Nigeria: An Empirical study.

Abstract

This study examined the crowding out effects of corruption and its destabilizing implications on the economic growth of Nigeria, using parsimonious error correction mechanism. The study employed experimental research design approach for the data analysis, which combined theoretical consideration (a priori criteria) with empirical observations and extracted maximum information from the available data. The Nigerian secondary and time series data were tested for stationary and co integration variables before they were used. The results of the regression showed that there is a negative relationship between corruption and output growth in Nigeria. These findings have some policy implications. The government should introduce a national reorientation program to educate people on the crucial need to eradicate corruption in all sectors of Nigeria’s economic and socio-political systems and strengthen the previous efforts in programs like Code of Conduct Bureau, WAI Brigade, ICPC, EFCC and NATPIP. The government must introduce an equitable wages and incentive system and improve other conditions of work so that the level of poverty could be reduced and the quality of life improved. This will inevitably reduce people’s vulnerability and susceptibility to corruption. She must also introduce transparency devices that can detect and prevent corruption in all areas.

Keywords: Corruption, Economic Growth, corruption perception index, unemployment