Abubakar, Mu'awiya and Abdullahi, Muhammad and Bala, Kabir
(2018)
Analysis of the Causality Links between the Growth of the
Construction Industry and the Growth of the Nigerian Economy.
Journal of Construction in Developing Countries , 23 (1).
pp. 103-113.
ISSN 1823-6499
Abstract
The construction industry makes a signifcant contribution to the growth and
development of every economy, by providing infrastructure for other productive ventures,
shelter to the citizens and generating employment to people of different levels of knowledge
and skills. In Nigeria, the construction industry contributes an average of over 3% to the
annual gross domestic product and an average of about one-third of the total fxed capital
investment. Despite the huge potentials of the Nigerian construction industry, little attention is
given to its signifcance in driving the Nigerian economy to greater heights. This study explored
the empirical evidence of causal relationship between the growth and development of
the Nigerian economy and that of the construction sector. Econometric techniques such
as unit root test, Granger causality test and Johansen's co-integration test were conducted
to establish the actual relationship between the output of the construction sector (CS) and
the gross domestic product (GDP) of the country. Twenty six years' time series data for the
CS and the GDP between 1990 to 2015 was obtained from the statistics database of the
Central Bank of Nigeria (CBN) and used for the analyses. The research revealed that despite
the harsh economic realities facing the country in recent times, there exist a bi-directional
linkage between the CS and the GDP of Nigeria. Each of them precedes the other by one
year. The study recommends that any effort to diversify the Nigerian economy should consider
revamping the construction industry for improved productivity in order to beneft from its
signifcant positive effects on the economy.
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