CAPITAL FORMATION AND UNEMPLOYMENT IN NIGERIA (1985–2024): EVIDENCE FROM ARDL APPROACH

Authors

Boma Tubotamuno Department of Economics, University of Port Harcourt, Nigeria
Isaac Olubiyi Oladosu Department of Economics, University of Port Harcourt, Nigeria

Capital Formation, Unemployment, Gross Fixed Capital Formation, Net Fixed Capital Formation, National Saving

This study empirically appraised the effect of capital formation on unemployment

in Nigeria from 1986 to 2024. The study utilised annual time series data from the National Bureau

of Statistics (NBS) and the World Development Indicators (WDI) of the World Bank. The data

analysis techniques adopted comprise the Autoregressive Distributed Lag (ARDL) approach,

bounds cointegration test, and ADF unit root test. The study found that the unemployment rate in

Nigeria is significantly diminished by gross fixed capital formation and net fixed capital formation,

while national saving has a negative and non-significant impact on the unemployment rate. The

study concluded that capital formation plays a significant role in reducing unemployment in

Nigeria. The implication of this is that policies aimed at promoting capital accumulation can serve

as effective tools for unemployment reduction. It shows that capital formation is not only

enhancing output (GDP) but also translating into inclusive growth by creating jobs. Therefore, the

government should prioritise and increase investments in critical infrastructure projects, including

energy generation (power plants), industrial zones, and transportation networks (roads, railways,

ports). These investments should concentrate on high-impact sectors that generate considerable

employment opportunities and stimulate economic activity.