VARIATIONS IN REVENUE ALLOCATION AND ECONOMIC GROWTH IN NIGERIA By Fredrick Onyebuchi Asogwa

VARIATIONS IN REVENUE ALLOCATION AND ECONOMIC GROWTH IN NIGERIA
By
Fredrick Onyebuchi Asogwa (PhD)
Department of Economics, University of Nigeria, Nsukka, Enugu State, Nigeria
[email protected] ; [email protected],edu.ng
+2348030944805
Joseph I. Amuka (PhD)
Department of Economics, University of Nigeria, Nsukka, Enugu State, Nigeria
Ambrose OmejeDepartment of Economics, University of Nigeria, Nsukka, Enugu State, Nigeria
Abstract
This paper examined the adopted variations in revenue allocation and economic growth in Nigeria using time series data from 1981 to 2014 generated from the statistical bulletin of the Central Bank of Nigeria (CBN). The objectives were to determine the impact of the adopted revenue allocation formula on economic growth and to examine if there is a long run relationship between the variations in the revenue allocation distributed at federal and the state governments and economic growth in Nigeria. We adopted OLS regression model after testing for unit root and cointegration. The unit root indicates that all variables are integrated of order one I(1) except population growth and FDI which are I(2) and I(0) respectively. The result of the estimated model shows that growth rate of federal government allocation, population growth and FDI significantly affect economic growth while state and inflation rate have insignificant impact on economic growth in Nigeria. The Augmented –Engel cointegration test applied to the model shows that there is a long run relationship between economic growth and the growth rate of the allocations of the federal and state governments from the federation account.

Keywords: Revenue Allocation, Economic Growth, cointegration , Federation account, fiscal
mobilizationIntroduction
The importance of revenue generation, allocation as well as its distribution towards maintaining the existing and new socio-politico-economic structure in any economy; be it centrally planned, market or mixed economies cannot be overemphasized. To this end, what revenue is to an individual or a firm is what it is to the government. Thus, revenue allocation and its distribution remain a vital sensitive issue which continues to spark off reactions from all stakeholders at all times. This is more so in the sub-Saharan region and particularly in Nigeria where ethnic plurality and language heterogeneity characterize the country’s existence.

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Nigeria as a nation operates a federal structure of government. Federalism refers the existence in one country of more than one level of government, each with different expenditure responsibilities and taxing powers. This shows that fiscal federalism, a consequence of federalism, is all about the relationship among the different units of functions and tax powers to the constituent units. The existence of imbalance between functions and resource base makes it expedient for the higher level of government to transfer revenue to the lower level. This is referred to as ‘efficiency transfer or balancing’ the sharing of funds from the federation account is one of the contentious and sensitive issues in the Nigeria polity; this has remained a central element of interfacial relations. In Nigeria revenue allocation is taken as the distribution of national revenue among the various tiers of government in the federation in such away as to reflect the structure of fiscal federalism. This issue is so important that in some other countries it has become a national question (Mbanefoh 1993, Emenuqua, 1993). For instance Kayode (1993) observed that a satisfactory solution to the question and its solution” This shows that in any nation the stability as a political entity depends to a large extent on revenue location. A democratically elected government can be sustained if only there is an appropriate distribution of nation revenue among state governments them.

In recent years, the issues of resource control, revenue allocation and fiscal federalism have dominated discussions at various levels of Nigeria’s political debate. Like most federal systems, Nigeria has a revenue distribution system in which the federal government shares revenue with the states and local governments. Different formulas at different times have been adopted. Similarly, at different times, ad hoc commissions have been set up to determine the allocation formulae and criteria. Between 1946 and 1979, there were eight of such commissions on revenue allocation. These were: Phillipson (1946), Hicks-Phillipson (1951), Chick (1953), Raisman (1958), Binns (1964), Dina (1968), Aboyade (1977), and Okigbo (1980). It was not until 1988 that a permanent body was created to monitor, review, and advise the federal government on RAS on a continuing basis. The new body, called the National Revenue Mobilization, Allocation, and Fiscal Commission, represents a structured attempt to replace thread hoc approaches to effecting changes in the RAS. This body is enshrined in the1989 Constitution.
Despite these efforts, revenue allocation has remained a contentious issue among the three tiers of government in Nigeria. In the last eight years, the 36 state governments have been at daggers-drawn with the Federal Government over the formulation of a revenue sharing formula that would be acceptable to all the stakeholders. One major impact of this seemingly never ending controversy is the fact that fiscal federalism in Nigeria has not been able to contribute optimally to social and economic development. Despite the considerable increase in the number of administrative units, the rate of real economic growth has been low and the country’s per capita income has declined considerably over the years compared with the level that was attained in the 1980s. As the nation operates a new era of democracy under a federal constitution, there is the need to critically review the division of functions among the various tiers of governments, as well as the revenue sharing arrangements in order to substantially improve the delivery of public goods and services as well as promote real economic growth.

The available literature on revenue allocation in Nigeria focuses mostly on justifying a particular sharing formula or proposing a new one. Notable among this category are: Phillips (1991) and Aluko (2002, 2004). Other studies including Anyanwu (1999), Aigbokhan (1999), Ebajemito and Abudu (1999), Okon and Egbon (1999), seem to discuss generally about fiscal federalism by diagnosing the Nigeria situation and proffering solutions.
The return of democratic government is expected to lead to the practice of a more balanced system of fiscal federalism, more transparency, fiscal accountability and more devolution of power to lower units of government and hence more fiscal decentralization. While a greater degree of decentralization would, no doubt, contribute to greater grassroots participation, generate more local development, increase efficiency and equity, create employment opportunity and promote poverty alleviation, it must not be done in such a way as to conflict with the national objective or unduly complicate it.
Revenue is allocated to the Nigeria federating units to meet up with their various constitutional assigned expenditures. Since Nigeria became independent in 1960, the assignments of government functions among the three tiers of government have not changed significantly except for few exceptions during the military regimes. Several constitutions of the Federal Republic of Nigeria contain decentralization of functions; the exclusive list contains the functions reserved for the federal government only, whereas the concurrent list has the functions for the federal and the state governments and where there is a conflict, the federal government shall prevail. The functions reserved for the states are found in the residual list.

A number of changes had occurred with respect to who has the right to revenues. The most significant is probably that of mining rents and royalties. Before 1959, regional governments had rights to 100% of mining rents and royalties but with the production and exploration of oil in 1958, and following Raisman Commission recommendations in 1959, revenue from mining rents and royalties was distributed as follows: mineral regions, 50%; Federal, 20%; and DPA, 30% (Adedeji 1969). Another change that is significant was in 1994 on sales tax that states (or regions) hitherto had 100% right. This was replaced by Value Added Tax (VAT) and is to be federally collected (Jimoh, 2003). Today, federal government has the right to 35% of this revenue. In virtually all cases, the changes have been in favor of the federal government at the expense of the regions.

Since 1946 when the first seed of federalism was sown in Nigeria, all major constitutional changes and/or changes in administration have been associated with attempts to modify or change the revenue sharing rights of the different tiers of government (HYPERLINK “http://sgo.sagepub.com/content/3/3/2158244013505602” l “ref-33″Ovwasa, 1995). This revenue sharing is in the form of vertical allocation (i.e., along the federal, states, and the local governments) and horizontal allocation (i.e., within states or local governments). About nine fiscal commissions were appointed to examine Nigeria revenue sharing arrangements between 1948 and 1988. These include Philipson (1948), Hicks (1952), Chick (1954), Raisman (1959), Binns (1964), Dina (1968), Aboyade (1977), Okigbo (1979), and Danjuma (1988) commissions (Akindele, 2002; Ekpo, 2004; Jomoh, 2003; Ovwasa, 1995; Udeh 2002). The recommendations of these commissions had often influenced the revenue sharing formula adopted at the respective periods. They determined the tiers of government that have rights to revenues collected. Presently, the constitutionally created Revenue Mobilization and Fiscal Commission influence revenue allocation in Nigeria. Over the years, revenues collected were allocated to influence economic growth and development in the country.

The recommendations of the various revenue allocations Commissions/Committees in Nigeria are based on basic needs , Minimum Material Standards, balanced development ,derivation, Equality of Access to Development Opportunities, Independent Revenue/Tax effort, Absorptive Capacity, Fiscal Efficiency, Minimum responsibility of Government, Population, Social Development Factor, Equality of States, Landmass and Terrain, and Internal Revenue Generation Effort.

The disbursement of the Federation Account is centered on the Vertical Allocation Formular (VAF) and the Horizontal Allocation Formular (HAF). The Vertical Allocation Formular shows the percentage allocated to the three tiers of government i.e. federal, states and local government. It allows every tier of government to know what is due to it (Bashir, 2008:3). The Horizontal Allocation Formular (HAF) is applicable to States and Local Government only. It provides the basis for sharing of the volume of revenue already Allocated to 36 States and 774 Local governments. Through the application of the principles of horizontal allocation formula, the allocation due to each State or Local Government is determined.
The conditions of the financial allocation in a federal system especially the one that is transfixed on ethnic groups is useful for the existence of the nation and her economy. The allocation of resources in most cases in Nigeria is subject to political, religious and social matters. This is in order with O’Connor(1993) which states that allotments of money and resources must reflect social and economic conflicts between classes and groups. The basis of federal statutory revenue allocation has always been one of the most controversial and destabilizing factors in the Nigeria’s national debate A true federal system is faced with the fundamental problems of how to allocate functions rationally; allocate taxing powers; and share revenue among the tiers of the government. There is no doubt that revenue allocation formula is faced with the aims of achieving national unity, economic growth, balanced development, self-sufficiency and high standard of living for the citizens (Badmus 1989,, Adesina 1998, Ekeh 1994, Adebayo 1990)
The variation in monthly revenue allocation by institutional framework in Nigeria is summarized in table 1.

Hitherto, no attempt has been made to even analyze the various allocations made to all the tiers of government. Some of the immediate puzzling issues that need to be examined critically from the previous allocations include the following:
what are the impacts of adopted revenue formula on economic growth in Nigeria?
Is there a long run relationship between the variations in the revenue allocation distributed at federal and the state government and economic growth in Nigeria.

Objectives
The broad objective of the study is to analyse the variations in revenue allocation in Nigeria while the specific objectives are:
To determine the impacts of adopted revenue formula on economic growth in Nigeria
To examine if there is a long run relationship between the variations in the revenue allocation distributed at federal and the state government and economic growth in Nigeria.

Hypotheses
Ho: Revenue allocation formula has no impact on economic growth in Nigeria.

Ho: There is no long run relationship between the variations in the revenue allocation distributed at the federal and state government and economic growth in Nigeria.

Significance of the Study
The Knowledge of the trend in the Revenue allocation sharing formula will help Nigeria in the distribution of national resources and drop the politics of revenue allocation. This paper aims at providing answers to various questions that are common in resource distribution as well as serving as a platform for raising a number of pertinent issues as basis for further research into areas that are likely to be of great interest for policy analysts, political analysts and the parliamentarians who have responsibility for creating states.
Scope of Study
This paper covers a period of 34 years (1981-2014) using annual data from the Central Bank of Nigeria (CBN). The variables of interest are anchored in Nigeria’s revenue allocation formular and other macroeconomic indicators.

Literature review
Internally generated revenue of sub-national governments is located within the framework of the theory and practice of fiscal federalism. The rationale for sub national government derives from the notion that there are geographical dimensions to pure and impure public goods. Local public goods with limited and differential spatial incidence of benefits might not be efficiently provided by a central government (Brown and Jackson, 1994, 255).

According to the resource function of the government, revenue is allocated to federating units of a country for economic development, otherwise called fiscal federalism. Nigeria’s fiscal federalism has emanated from historical, economic, political, geographical, cultural, and social factors. In all of these, fiscal arrangements remain a controversial issue in allocating distributable pool account (DPA) of the federation since 1946 (Ekpo 2004). The Nigerian Federal system plays legitimates and accommodates sectional-territorial constituencies, thereby providing the structural and institutional framework for the organization and mediation of the ethnic competition for public resources in Nigeria (Suberu, 1994, 2000)
There are two challenges emanating from an economic efficiency perspective of the division of responsibilities and powers of federating governments. First, sub-national groupings and local boundaries naturally come with history and geography and are hardly the outcomes of economic efficiency considerations. Secondly, even if there are clear delineations of what is pure public goods; they cannot be equitably allocated across all geographical boundaries within the country. As such, the need for deliberate assignment of fund raising, spending and policy powers arises in a fiscal state. One of the oldest models for responsibility and revenue assignment and sharing among different tiers of government is the Tiebout-Musgrave layer cake model.

Musgrave, (1960) and Tiebout,( 1961) assert that stabilization and distribution functions are natural functions of the central government while lower tiers of government take on resource allocation. Given that sub national governments do not have monetary and interest rate policy instruments at their disposal, expansionary fiscal policies would lead to fiscal deficits with improbable financing options and therefore unsustainable debt. In addition, given the high openness and diffusion of resources among the regions within the country, expansionary fiscal policies at sub-national levels will result in high leakages thereby thinning out the overall impact of the locally initiated stimulus.
Modification of the neoclassical growth theory came into existence because of its inability to explain savings rate and rate of technological progress as exogenous factors.. Endogenous growth theory was introduced in the early 1980s with the assertion that economic growth depends primarily on endogenous factors, such as human capital, innovations, knowledge, and positive externalities((Akanbi and DU Toit 2011, Romer 1994). The endogenous growth theory holds that policy measures within an economy, such as revenue allocations positively influence the long-run growth rate of an economy.
Solow’s neoclassical growth model exhibited diminishing returns to labor and capital separately and constant returns to both factors. Technological progress become the residual factor explaining long-term growth and its level was assumed by Solow and other growth theorists to be determined exogenously.

Yilmaz (2000) in his study on fiscal decentralization in unitary and federal countries found that decentralization results in growth of real GDP per capita in the unitary countries and decentralization is insignificant to influence growth of real GDP per capita in federal countries. Martin-Vazquez and McNab (2002) also found that allocation of revenue significantly reduces the growth of real GDP per capita in developed countries.

Some studies maintained that state governments’ public expenditures are influenced by federal grants and statutory allocation had significant effect on financing states’ real assets investment (Akinlo 1999, Akujiobi and Kalu 2009, Aigbokhan, 1999; Jimoh 2003). Other researchers found that there no contribution of share of states revenue from federation to economic growth process in Nigeria (Emengini and Anere, 2010, Olofin et al, 2012; and Usman 2011).

The Model
This paper adopts the neoclassical growth model, which stresses the importance of labour, capital and technology. Thus, the expanded version of Harod-Domar model by Robert Solow stated more formally the growth model as:
Y = f (K, L) ………….(1)
Where: Y = output growth; f =functional notation; K = Capital input; L = LabourIt is useful to test for time series characteristics that are time invariant in order to avoid spurious regression results. The unit root of the series was tested using the Augmented Dickey-Fuller (ADF) test which is given as:
?yt = ?1 + ??Yt-1 +?Yt-1 + ?t————————————— (4)
Where Yt= the individual time series; ?t = pure white noise.

The co-integration test was conducted in testing for a long-run equilibrium relationship among the variables in the model. The Augmented Engel and Granger 2-step approach due to Engel and Granger (1987) was employed in testing for co-integration among the variables in the model. This test is specified as:
??t = ??t-1 + ?i ?? t-i + ?t ……………………………………………………(5)
Where ?t = the generated residual series
The model for estimation is specified as:
Log RGD = F( Fed, Stat ,Pogr ,Inf , FDI )……..(6)
Where;
Log RGDP = real gross domestic product growth rate (economic growth rate)
Pogr=Population growth rate in Nigeria.
Fed= federal government share from the federation account.
Stat = state government share from the federation account
INF= inflation rate
FDI= foreign direct investment.

?i= coefficients of the variables
?0= is the intercept.

Expressing the above function in econometric form and transforming it into log:
Log RGDP = ?0 + ?1logFed +?2logStat +?3Pogr +?4Inf + ?5LogCAPEX+ ?6LogFDI+ µ…….(7)
Where: Ui = stochastic term.
The a priori expectations of the parameters are positives
In order to test for autocorrelation, Durbin-Watson test was adopted. The test for heteroscedasticity was carried out using the White General Test for Heteroscedasticity while multicollinearity test was carried out using the correlation matrix. Jarque-Bera (JB) test of normality was applied to check if ?t ~ N (0, ?2).

Results
Stationarity Test
The result of the ADF unit root is presented with the aid of table 2. The result shows that all the variables are integrated of order one, I(1) except population growth (Pogr) and FDI which are integrated of order two and zero respectively.

The result of the OLS regression model is presented in table 3. The results of the estimated OLS regression indicates that a unit change in any of the variables selected increases economic growth except the growth share of the state allocation and population which contracts.. An increase in the population growth rate will on the average decrease economic growth rate by 2.275% while a unit change in the growth share of federal allocation, inflation, and FDI increases economic growth by 0.90 9%, 0.001%, 0.28% respectively. All the variables are significantly affecting economic growth except state allocation and inflation rate. The constant in the model is 6.89, indicating that economic growth remains at this magnitude even if all the explanatory variables do not change. The R2 in the model is 0.98 indicating a 98% explained variation in economic growth by the explanatory variables. This might be as a result of high degree of correlation among the exogenous variables in the model.
The F-test shows that the variables in the model are jointly statistically significant. Since 275.09 >2.45, we reject HO and conclude that the variables in the model are jointly statistically significant (ie Fcal>F Ftab(k-1, n-k) at ?=0.05(Ftab). The Jarque Bera (Jb) test indicates that the error term is normally distributed and follows the Chi-Square distribution with 2 degrees of freedom as shown in figure 1.

The result of the multicollinearity test conducted is shown in table 4. From the correlation table, there is high degree of correlation among LOGRGDP, LOGFDI, LOGCAPEX, and LOGSTAT while inflation rate and population growth have correlation coefficient less than 0.8 indicating absence of multicollineaity in them. The result of the white general heteroscedasticity test (without cross terms) shows that there is no presence of heteroscedasticity in the model as n.R2< ?2tab after the auxiliary regression.
Policy Recommendation
In the light of the above findings, the following recommendations are made:
(i) The relevant agency for revenue allocation like the Revenue Mobilisation and Fiscal Allocations Commission should restructure the revenue sharing formula so that it will have more significant impact on the economic growth of Nigeria.

(ii) The allocations that go to the federal government should be increased given its positive impact on the economic growth of Nigeria as against the state governments’ allocation whose growth rate has negative impact on the economic growth rate of Nigeria.

(iii) There is the need for the various anti-corrupt agencies like Economic and Financial Crimes Commission to investigate the various use to which these various allocation that go to the state and federal governments which have been growing over the years but the economic growth has not responded in pro rata to these allocation growth rates. Thus, there is the need to find out the points of leakages in the finances of the federal and state governments and block them.
(iv) There is need for population control as population growth has significant negative impact on economic growth.
Conclusion
From the result of the analysis carried out on the growth rates of the federal and state governments’ allocations from the federation account, it could be concluded that for the period under review, the growth rates of state allocation has not significantly impacted on the economic growth of Nigeria despite the continued growth in the allocation over the years. In a nutshell, the growth rate of the federal government allocation from the federation account and Foreign Direct Investment (I) have impacted positively and significant on the economic growth. Population growth has significantly reduced economic growth.

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Tables
Table 1: variation in revenue allocation by institutional framework in nigeriaBENEFICIARIES/INSTITUTION 1980-1984 1985-1993 1994-1998 1999-2009 2000-2010 2011 till date
Federal Government 55 55 48.5 36 52.68 52.68
State Government 35 32.5 24 36 26.72 26.72
Local Government 10 10 20 25 20.60 20.60
Mineral producing State ____ 1.5 ____ ____ ____ ____
Ecological Fund ____ 1 ____ 2 ____ ____
Special Fund ____ 7.5 ____ ____ ____
Federal Capital Territory ____ ___ 1 ____ ____
Total % 100 100 100 100 100 100
Source: Firstbank of Nigeria
Table 2: Unit Root Result for the Variables
Variable ADF t-statistic Critical value @ 5% Order of integration
LOGRGDP -4.160509 -3.562882 I(1)
Pogr-8.497113 -3.568379 I(2)
LOGFed-5.584128 -3.557759 I(1)
LOGStat-5.339818 -3.557759 I(1)
Inf-4.524616 -3.574244 I(1)
FDI -3.723719 -3.552973 I(0)
Table 3 OLS result for the model
Variable Coefficient Std. Error t-statistic p-value
Constant( C) 6.893535 2.876144 2.396798 0.0235
Popgr-2.275313 1.032074 -2.204602 0.0359
Logfed0.909154 0.399289 2.276931 0.0306
Logsta-0.115960 0.401119 -0.289093 0.7746
Inf0.001110 0.003457 0.321049 0.7506
Log FDI 0.282647 0.126957 2.226320 0.0342
R2 = 0.98 , F = 275.09
Table 4: The result of pair-wise correlation matrix
LOGRGDP LOGFED LOGFDI LOGCAPEX INF LOGSTAT POPGR
LOGRGDP  1.000000  0.985921  0.902342  0.983631 -0.286338  0.981726  0.236784
LOGFED  0.985921  1.000000  0.894172  0.961466 -0.328091  0.997608  0.299389
LOGFDI  0.902342  0.894172  1.000000  0.882472 -0.193482  0.899585  0.378323
LOGCAPEX  0.983631  0.961466  0.882472  1.000000 -0.316664  0.954569  0.157127
INF -0.286338 -0.328091 -0.193482 -0.316664  1.000000 -0.323077 -0.289353
LOGSTAT  0.981726  0.997608  0.899585  0.954569 -0.323077  1.000000  0.329967
POPGR  0.236784  0.299389  0.378323  0.157127 -0.289353  0.329967  1.000000

FIGURES

Figure 1: Normality test
Appendix
OLS RESULT FOR THE MODEL
Dependent Variable: LOGRGDP Method: Least Squares Date: 08/14/16 Time: 06:52 Sample: 1981 2014 Included observations: 34 Variable Coefficient Std. Error t-Statistic Prob.  
LOGFED 0.535874 0.284235 1.885319 0.0702
LOGFDI 0.041013 0.097856 0.419116 0.6784
LOGCAPEX 0.527858 0.094110 5.608981 0.0000
LOGSTAT -0.079732 0.277676 -0.287139 0.7762
POPGR 0.474241 0.866298 0.547434 0.5886
INF 0.004908 0.002486 1.974105 0.0587
C 1.018852 2.249221 0.452980 0.6542
R-squared 0.990786     Mean dependent var7.862576
Adjusted R-squared 0.988738     S.D. dependent var2.130328
S.E. of regression 0.226073     Akaike info criterion 0.045327
Sum squared resid1.379948     Schwarz criterion 0.359578
Log likelihood 6.229438     Hannan-Quinn criter. 0.152496
F-statistic 483.8786     Durbin-Watson stat 1.159276
Prob(F-statistic) 0.000000 NORMALITY TEST

MULTICOLLINEARITY TEST
LOGRGDP LOGFED LOGFDI LOGCAPEX INF LOGSTAT POPGR
LOGRGDP  1.000000  0.985921  0.902342  0.983631 -0.286338  0.981726  0.236784
LOGFED  0.985921  1.000000  0.894172  0.961466 -0.328091  0.997608  0.299389
LOGFDI  0.902342  0.894172  1.000000  0.882472 -0.193482  0.899585  0.378323
LOGCAPEX  0.983631  0.961466  0.882472  1.000000 -0.316664  0.954569  0.157127
INF -0.286338 -0.328091 -0.193482 -0.316664  1.000000 -0.323077 -0.289353
LOGSTAT  0.981726  0.997608  0.899585  0.954569 -0.323077  1.000000  0.329967
POPGR  0.236784  0.299389  0.378323  0.157127 -0.289353  0.329967  1.000000

HETEROSCEDACITY TEST
Heteroskedasticity Test: White F-statistic 1.213290     Prob. F(6,27) 0.3300
Obs*R-squared 7.220336     Prob. Chi-Square(6) 0.3010
Scaled explained SS 3.704381     Prob. Chi-Square(6) 0.7166
Test Equation: Dependent Variable: RESID^2 Method: Least Squares Date: 08/14/16 Time: 07:22 Sample: 1981 2014 Included observations: 34 Variable Coefficient Std. Error t-Statistic Prob.  
C -0.066744 0.265555 -0.251338 0.8035
LOGFED^2 0.004701 0.005207 0.902732 0.3747
LOGFDI^2 -1.65E-05 0.001500 -0.010978 0.9913
LOGCAPEX^2 0.002338 0.002294 1.019039 0.3172
LOGSTAT^2 -0.008168 0.006192 -1.319161 0.1982
POPGR^2 0.012051 0.039504 0.305063 0.7627
INF^2 -8.25E-06 8.08E-06 -1.020956 0.3163
R-squared 0.212363     Mean dependent var0.040587
Adjusted R-squared 0.037332     S.D. dependent var0.052550
S.E. of regression 0.051560     Akaike info criterion -2.910896
Sum squared resid0.071778     Schwarz criterion -2.596645
Log likelihood 56.48523     Hannan-Quinn criter. -2.803727
F-statistic 1.213290     Durbin-Watson stat 2.417306
Prob(F-statistic) 0.329974

AUTOCORRELATION TEST
Breusch-Godfrey Serial Correlation LM Test: F-statistic 9.927756     Prob. F(2,25) 0.0007
Obs*R-squared 15.05027     Prob. Chi-Square(2) 0.0005
Test Equation: Dependent Variable: RESID Method: Least Squares Date: 08/10/16 Time: 09:38 Sample: 1981 2014 Included observations: 34 Presample missing value lagged residuals set to zero.

Variable Coefficient Std. Error t-Statistic Prob.  
POPGR 0.140969 0.480574 0.293334 0.7717
LOGFED -0.078666 0.134279 -0.585844 0.5632
LOGSTAT 0.098330 0.132642 0.741320 0.4654
INF 0.001117 0.001283 0.870329 0.3924
LOGCAPEX 0.009276 0.046502 0.199478 0.8435
LOGFDI -0.055229 0.056096 -0.984542 0.3343
C 0.756655 1.101872 0.686700 0.4986
RESID(-1) 0.862485 0.214584 4.019326 0.0005
RESID(-2) -0.214409 0.239413 -0.895563 0.3790
R-squared 0.442655     Mean dependent var-1.26E-15
Adjusted R-squared 0.264304     S.D. dependent var0.124217
S.E. of regression 0.106545     Akaike info criterion -1.418578
Sum squared resid0.283794     Schwarz criterion -1.014541
Log likelihood 33.11582     Hannan-Quinn criter. -1.280790
F-statistic 2.481939     Durbin-Watson stat 1.861902
Prob(F-statistic) 0.039196

Author Biography
Dr. Fredrick Onyebuchi Asogwa is a lecturer in the Department of Economics, University of Nigeria, Nsukka. He has accumulated experience in teaching Research methods in Economics, Mathematical Economics, Econometrics, Economic Development and Planning, and Public Finance in both undergraduate and postgraduate levels of the University of Nigeria, Nsukka. Dr Asogwa is an adjunct Senior Lecturer at the Department of Economics, Enugu State University of Science and Technology (ESUT), Enugu. He is a professional member of the Nigeria Economic Society (NES) and international professional member of the International Society for Development and Sustainability (ISDS) Japan. Dr. Asogwa has worked as a senior economic consultant at the Center for Demographic Research, Department of Economics, University of Nigeria, technical adviser on Research matters to the Federal government and the National Bureau of Statistics on Core Welfare Indicator Questionnaire Survey (CWIQS) and Senior project consultant, Integrated Consultants Nigeria (ICN) 2014. He has presented papers at national and international level including South Africa.