Domestic Private Capital Accumulation and Economic Development in Nigeria 1970 -2010

This study empirically examine the relationship between Domestic Private Capital Accumulation and Economic Development in Nigeria from 1970-2010. The variables PCGDP, PINV, PUINV, RIR, and INFLA attained stationarity after first differences. The Johansen co integration test of trace and maximum Eigen value statistics was used to establish long run equilibrium relationship among the variables in the model. We also estimated the over parameterized and parsimonious ECM to account for short run dynamic adjustment required for stable long run equilibrium relationship among the variables in the model. All the independent variables (PUINV,PINV, RIR,INFLA) impacts positively on economic development .Public and Private investment conform to apriori expectations while inflation and real interest rate contradicts apriori expectations. The analysis suggest a high degree of macroeconomic stability and a low and predictable inflation rates have a paramount importance to ensure a strong response to Private investment to economic incentives. The overall harmony of macroeconomic policies and stability in the country is essential for the promotion of Private investment. Also proactive measures are required to ensure macroeconomic stability in the country.