MACROECONOMIC DETERMINANTS OF INCOME PER CAPITA IN NIGERIA
This paper investigates the macroeconomic determinants of income per capita in Nigeria, dwelling on the short-term and the long-term impacts of exchange rate dynamics, government effectiveness, trade openness, and crude oil price. The time-series data between 1981 and 2024 are analysed on the basis of the autoregressive distributed lag (ARDL) model to determine dynamic adjustments and the relationships in the long-run equilibrium. The short-run result reveals that depreciation of the exchange rate decreases income per capita, while trade openness and fluctuations of oil prices produce adjustment effects. Government effectiveness is associated with short-run transitional costs but positively related with long-run income growth. The error correction mechanism signifies fairly rapid adjustment to equilibrium. The estimate in the long-run shows that crude oil prices dominate the income per capita, trade openness and quality of governance also justify income growth. The results indicate the structural reliance of Nigeria on the oil revenues and the superior role of institutional reforms, diversification of trade, and macroeconomic stability in ensuring sustainable increases in the living standards.
Keywords: Income per capita, Exchange rate dynamics, Government effectiveness, Trade openness, Crude oil prices
JEL Classifications: F41, O11, P36
