The relationship between good governance, economic growth and poverty reduction in Nigeria

This study attempts to examine the relationship between good governance and poverty reduction in Nigeria. The study applies a time series data set, which covers the period from1980 to 2011. However, considering the small sample size of the data, the study employed the Autoregressive Distributed Lag Model (ARDL) approach, introduced by Pesaran et al. (2001). It an approach which tests the existence of a relationship between variables in levels which are applicable irrespective of whether the underlying regressors are purely I(0), purely I(1) or mutually integrated. This study also uses the Error Correction Model (ECM) to estimate the short–run dynamic relationship between good governance and poverty reduction. The findings of the study provide evidence of a long term relationship between good governance and poverty reduction. The results of the ARDL suggest that good governance co-integrates with poverty reduction. However, there is no evidence to show that economic growth integrates with poverty reduction in Nigeria. The measures of governance such as the rule of law, quality of bureaucracy, and strong civil liberty significantly affect poverty reduction in the short run, the coefficient of the error correction term is negative and significant and the magnitude of the coefficient indicates the extent to which any disequilibrium is corrected in more than two periods