The Impact of the Growth Rate of the Gross Domestic Product (GDP) on Poverty Reduction in Nigeria

Abstract

This study is on the impact of GDP growth rate on poverty reduction in Nigeria. The study made use of secondary data sourced from the Central Bank of Nigeria statistical bulletin and the National Bureau of Statistics between 1986 and 2012. The model for the study has as its dependent variable the Unemployment rate whose reduction should imply poverty reduction and its explanatory variable is the GDP growth rate. Using the Ordinary Least Square (OLS) regression techniques; our study revealed that the there is a weak relationship between the unemployment rate and the Nigerian Gross Domestic Product (GDP) growth rate and that instead of an inverse relationship, it was positive. That is, as GDP was growing the unemployment rate was also growing. The study holds that when citizen cannot work to earn they will remain poor. This implies that the GDP growth has not impacted positively on the poor through job creation sufficient enough to reduce the percentage of the unemployed and the incidence of poverty over the period of study. We therefore recommend that there is the need to reassess the growth direction so as to give priority to key sectors like the agricultural and the industrial sectors that have the capacity to generate and absorb more labours thereby solving employment problem and at the same reducing the poverty incidence on the citizens.