Effect of sector-specific domestic investments on economic growth in Nigeria: a comparative analysis of agriculture, manufacturing, and services
Abstract
This paper investigates the relative contributions of industry, services, and agriculture to Nigeria's economic growth. The research study covers a period of 24 years, from 2000 to 2023. Data are obtained from the Central Bank Statistical Bulletin and World Development Indicators. The estimation technique employed shall be the Autoregressive Distributed Lag. These results make it clear that if economic development is to be witnessed in Nigeria, the country needs investments in domestic agriculture. On one hand, industry significantly negatively impacts economic growth in the long run while being insignificant in the short run, according to this research. Investment in local manufacturing negatively influences economic development in Nigeria; this suggests inefficiency or a structural bottleneck that may stand in the way of the capacity of the country for growth. However, the service industry is a major determinant of economic growth in the country because of its positive influence on the economic development of Nigeria. The findings of this study suggest that such policies aimed at increasing domestic investments in services and agriculture while tackling the challenges of manufacturing industries would be critical for long-term economic growth, considering the proportionate importance of each sector. Based on this, the report calls for an investment approach that is more sophisticated, taking into consideration the needs of individual sectors and their linkages to the Nigerian economy in general.
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Abdulkarim, Y. (2023). A systematic review of investment indicators and economic growth in Nigeria. Humanities and Social Sciences Communications, 10(1), 1-13.
African Development Bank. (2025). African economic outlook 2025. https://www.afdb.org/en/documents/african-economic-outlook-2025
Adewale, A. A. (2025). Effect Of Monetary Policy Rates and Inflation on The Nigerian Exchange Group (NGX). Kerbala International Journal of Management and Economics, 13(48), 13–26. https://doi.org/10.63540/kijme.v13i48.3656
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Adewale, A. A. (2025). Capital Expenditure and Inflation: Is Government Spending Worsening Nigeria’s Economic Crisis? Indonesian Journal of Business and Economics, 8(1),1116-1137. https://ijbe.uniku.ac.id/pub/article/view/2
Adewale, A. A., & Adeyemo, A. A. (2024). Еffect of unemployment and inflation on Nigerian economic growth: a time-series analysis. The Journal of VN Karazin Kharkiv National University. Series: International Relations. Economics. Country Studies. Tourism, (19), 47-56. https://doi.org/10.26565/2310-9513-2024-19-05
Adewale, A. A., & Ozabeme, L. S. (2025). Impact of Entrepreneurship Financing on Economic Growth in Nigeria (1996-2023). Bayero University Journal of Finance, 2(1), 28–45. https://doi.org/10.5281/zenodo.17558158
Aghion, P., & Howitt, P. (1992). A model of growth through creative destruction. Econometrica, 60(2), 323–351. https://doi.org/10.2307/2951599
Amade, M. A., Mohammed, I., Ibisanmi, E. V., Owolabi, A. T., & Joshua, U. (2022). Interaction between domestic investment, foreign direct investment, and economic growth in Nigeria. Ömer Halisdemir Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 15(2), 261-275.
Anwar, N., & Elfaki, K. E. (2021). Examining the relationship between energy consumption, economic growth, and environmental degradation in Indonesia: Do capital and trade openness matter?. International Journal of Renewable Energy Development, 10(4), 769.
Aslan, A., & Altinoz, B. (2021). The impact of natural resources and gross capital formation on economic growth in the context of globalization: Evidence from developing countries on the continent of Europe, Asia, Africa, and America. Environmental Science and Pollution Research, 28(26), 33794-33805.
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Chenery, H., & Syrquin, M. (1975). Patterns of development, 1950-1970. Oxford University Press.
Ewubare, D. B., & Worlu, L. K. (2020). Effect of domestic investment on economic growth in Nigeria. International Journal of Economics and Financial Management, 5(1), 1-8.
Fakraoui, N., & Bakari, S. (2019). Tie among domestic investment, exports, and economic growth: Empirical analysis from India. Journal of Smart Economic Growth, 4(1), 1-15.
Harrod, R. F. (1939). An essay in dynamic theory. The Economic Journal, 49(193), 14–33. https://doi.org/10.2307/2225181
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Kukaj, H., & Ahmeti, F. B. (2016). The importance of foreign direct investments on economic development in transitional countries: A case study of Kosovo. European Scientific Journal, 12(7), 288-305.
Lewis, W. A. (1954). Economic development with unlimited supplies of labour. The Manchester School, 22(2), 139–191. https://doi.org/10.1111/j.1467-9957.1954.tb00021.x
Mohammed, B., Bunu, N. M., Bazza, A. H., Hassan, A. A., Adamu, M. B., Yahaya, S., Usman, A. B., & Abubakar, S. (2022). Structural change and economic growth in Nigeria. Lafia Journal of Economics and Management Sciences, 7(2). https://lajems.com/index.php/lajems/article/download/228/178
Nnamocha, P. N., & Anyanwu, A. C. (2022). Domestic investment and economic growth in Nigeria, 1980-2020. International Journal of Research and Scientific Innovation (IJRSI), 9(8), 122-131.
Ogunjinmi, O. O. (2022). The impact of domestic investment on economic growth in Nigeria: Further evidence. Asian Research Journal of Current Science, 134-142.
Okafor, I. G., Eje, G. C., & Eja, M. E. (2024). Domestic investment and economic growth in Nigeria: An ARDL bounds testing approach (1981–2022). Journal of African Contemporary Research, 15(2), 120–138.
Oyedokun, E. G., & Ajose, K. (2018). Domestic investment and economic growth in Nigeria: An empirical investigation. International Journal of Business and Social Science, 9(2), 130-138.
Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002–1037. https://doi.org/10.1086/261420
Saleem, M., & Zaheer, R. (2018). A study on the influence of domestic investment on economic growth during 1980-2016. J Global Econ, 6(3), 1-5.
Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94. https://doi.org/10.2307/1884513
Umar, A., & Zakari, J. (2020). Corruption and domestic investment relationship in Nigeria: An empirical investigation. Gusau International Journal of Management and Social Sciences, 3(1), 17-17.
World Bank. (2025). Nigeria development update: Positive economic momentum in Nigeria, now time to bring home the gains. https://www.worldbank.org/en/news/press-release/2025/10/08/positive-economic-momentum-in-nigeria-now-time-to-bring-home-the-gains
Zamilur, M., & Ferdaus, J. (2021). Impacts of domestic savings and domestic investment on economic growth: An empirical study for Pakistan. Journal of Social Economics Research, 8(1), 1-11.
Abdulkarim, Y. (2023). A systematic review of investment indicators and economic growth in Nigeria. Humanities and Social Sciences Communications, 10(1), 1-13.
African Development Bank. (2025). African economic outlook 2025. https://www.afdb.org/en/documents/african-economic-outlook-2025
Adewale, A. A. (2025). Effect Of Monetary Policy Rates and Inflation on The Nigerian Exchange Group (NGX). Kerbala International Journal of Management and Economics, 13(48), 13–26. https://doi.org/10.63540/kijme.v13i48.3656
Adewale, A.A. (2025). Effects Of Budget Deficit and Money Supply on Inflation in Nigeria. Business Excellence & Management, 15(3), 21-39. https://doi.org/10.24818/beman/2025.15.3-02
Adewale, A. A. (2025). Capital Expenditure and Inflation: Is Government Spending Worsening Nigeria’s Economic Crisis? Indonesian Journal of Business and Economics, 8(1),1116-1137. https://ijbe.uniku.ac.id/pub/article/view/2
Adewale, A. A., & Adeyemo, A. A. (2024). Еffect of unemployment and inflation on Nigerian economic growth: a time-series analysis. The Journal of VN Karazin Kharkiv National University. Series: International Relations. Economics. Country Studies. Tourism, (19), 47-56. https://doi.org/10.26565/2310-9513-2024-19-05
Adewale, A. A., & Ozabeme, L. S. (2025). Impact of Entrepreneurship Financing on Economic Growth in Nigeria (1996-2023). Bayero University Journal of Finance, 2(1), 28–45. https://doi.org/10.5281/zenodo.17558158
Aghion, P., & Howitt, P. (1992). A model of growth through creative destruction. Econometrica, 60(2), 323–351. https://doi.org/10.2307/2951599
Amade, M. A., Mohammed, I., Ibisanmi, E. V., Owolabi, A. T., & Joshua, U. (2022). Interaction between domestic investment, foreign direct investment, and economic growth in Nigeria. Ömer Halisdemir Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 15(2), 261-275.
Anwar, N., & Elfaki, K. E. (2021). Examining the relationship between energy consumption, economic growth, and environmental degradation in Indonesia: Do capital and trade openness matter?. International Journal of Renewable Energy Development, 10(4), 769.
Aslan, A., & Altinoz, B. (2021). The impact of natural resources and gross capital formation on economic growth in the context of globalization: Evidence from developing countries on the continent of Europe, Asia, Africa, and America. Environmental Science and Pollution Research, 28(26), 33794-33805.
Bakari, S. (2017). The impact of domestic investment on economic growth: New evidence from Malaysia. Journal of Smart Economic Growth, 2(2), 105-121.
Bakari, S., & El Weriemmi, M. (2022). Causality between domestic investment and economic growth in Arab countries. MPRA Paper No. 113077.
Bakari, S., & El Weriemmi, M. (2022). The nexus between domestic investment and economic growth in Arab countries: A VECM analysis (1990–2020). International Journal of Economics and Finance, 14(5), 112–130. https://doi.org/10.5539/ijef.v14n5p112
Barro, R. J., & Sala-i-Martin, X. (1999). Economic growth. MIT Press.
Chenery, H., & Syrquin, M. (1975). Patterns of development, 1950-1970. Oxford University Press.
Ewubare, D. B., & Worlu, L. K. (2020). Effect of domestic investment on economic growth in Nigeria. International Journal of Economics and Financial Management, 5(1), 1-8.
Fakraoui, N., & Bakari, S. (2019). Tie among domestic investment, exports, and economic growth: Empirical analysis from India. Journal of Smart Economic Growth, 4(1), 1-15.
Harrod, R. F. (1939). An essay in dynamic theory. The Economic Journal, 49(193), 14–33. https://doi.org/10.2307/2225181
Herrendorf, B., Rogerson, R., & Valentinyi, Á. (2014). Growth and structural transformation. In P. Aghion & S. N. Durlauf (Eds.), Handbook of economic growth (Vol. 2, pp. 855–941). Elsevier. https://doi.org/10.1016/B978-0-444-53540-5.00006-9
Ijirshar, V. U., Anjande, G., Fefa, J., & Mile, B. N. (2019). The growth-differential effects of domestic investment and foreign direct investment in Africa. CBN Journal of Applied Statistics, 10(2), 139-167.
Kukaj, H., & Ahmeti, F. B. (2016). The importance of foreign direct investments on economic development in transitional countries: A case study of Kosovo. European Scientific Journal, 12(7), 288-305.
Lewis, W. A. (1954). Economic development with unlimited supplies of labour. The Manchester School, 22(2), 139–191. https://doi.org/10.1111/j.1467-9957.1954.tb00021.x
Mohammed, B., Bunu, N. M., Bazza, A. H., Hassan, A. A., Adamu, M. B., Yahaya, S., Usman, A. B., & Abubakar, S. (2022). Structural change and economic growth in Nigeria. Lafia Journal of Economics and Management Sciences, 7(2). https://lajems.com/index.php/lajems/article/download/228/178
Nnamocha, P. N., & Anyanwu, A. C. (2022). Domestic investment and economic growth in Nigeria, 1980-2020. International Journal of Research and Scientific Innovation (IJRSI), 9(8), 122-131.
Ogunjinmi, O. O. (2022). The impact of domestic investment on economic growth in Nigeria: Further evidence. Asian Research Journal of Current Science, 134-142.
Okafor, I. G., Eje, G. C., & Eja, M. E. (2024). Domestic investment and economic growth in Nigeria: An ARDL bounds testing approach (1981–2022). Journal of African Contemporary Research, 15(2), 120–138.
Oyedokun, E. G., & Ajose, K. (2018). Domestic investment and economic growth in Nigeria: An empirical investigation. International Journal of Business and Social Science, 9(2), 130-138.
Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002–1037. https://doi.org/10.1086/261420
Saleem, M., & Zaheer, R. (2018). A study on the influence of domestic investment on economic growth during 1980-2016. J Global Econ, 6(3), 1-5.
Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94. https://doi.org/10.2307/1884513
Umar, A., & Zakari, J. (2020). Corruption and domestic investment relationship in Nigeria: An empirical investigation. Gusau International Journal of Management and Social Sciences, 3(1), 17-17.
World Bank. (2025). Nigeria development update: Positive economic momentum in Nigeria, now time to bring home the gains. https://www.worldbank.org/en/news/press-release/2025/10/08/positive-economic-momentum-in-nigeria-now-time-to-bring-home-the-gains
Zamilur, M., & Ferdaus, J. (2021). Impacts of domestic savings and domestic investment on economic growth: An empirical study for Pakistan. Journal of Social Economics Research, 8(1), 1-11.
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