Rule of Law, Regulatory Quality and investment Growth in Nigeria: An Impact Analysis

Abstract

This study focus on rule of law, regulatory quality and investment growth in Nigeria employing ordinary least square method of estimation. A time series data spanning from 1997 to 2019. The economic growth was proxied with investment growth, while other variables include rule of law, regulatory quality, consumer price index, premium lending rate, trade openness, financial deepening, investment, gross investment and gross fixed capital formation. The finding of the OLS result shows that there is significant positive relationship between rule of law, regulatory quality and economic growth. Also, the result of the ECM shows that the speed of adjustment of the investment growth in the long run would be accounted for in short run by the magnitude of 27% and 40%. In the robustness check, negative significant relationship exist between rule of law, regulatory quality, investment and gross investment. Findings from granger causality test shows that there is a unidirectional causality between rule of law and economic growth, and also a bidirectional causality between regulatory quality and economic growth. Thus, improvement in the governance and institutional framework in Nigeria is suggested as policy recommendation.