Growth Without Development: Role of Corruption in Nigeria’s Economic Malaise

Bashir Usman Kurfi, Mohammed Adaya Salisu


Nigeria has for long made headline news as one of the most corrupt countries in the world. The country is well endowed with oil resources and is the largest nation on the African continent in terms of population and gross domestic product (GDP), and yet it lags other comparator countries by most development indicators. The paper aims to explore the nature, causes, magnitude and consequence of corruption, especially now that the new Nigerian government has identified the fight against corruption as its top policy priority. We employed a new statistical technique, based on a factor analytic approach to structural equation modelling, to estimate the magnitude of corruption and its impact on economic development. This study marks a complete departure from previous studies which solely relied on corruption perception indices, which do not necessarily reflect the extent of corruption in Nigeria. The findings based on the new dataset on corruption suggest that corruption, as a percentage of GDP, has risen from a mere 9 percent of GDP in 1960 to nearly 80% by 2013. Furthermore, results from the econometric analysis of the impact of corruption show that corruption does not only retard economic growth and development but it also undermines the efficiency of both domestic investment and foreign direct investment (FDI). The paper concludes by making a few policy recommendations for curbing corruption in Nigeria.

Keywords: Nigeria, Corruption, Hidden Economy, Economic Growth & Development, Structural Equation Modelling

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