Interactive Impact of Domestic Investment and Security Threat on Economic Growth in Nigeria

Abstract

The quest of Nigerian government to sustain economic growth amidst security threat and effort to create business friendly environment for investors is a policy and a scholarly issue. This study therefore examined the interactive effect of domestic investment and security threat on economic growth in Nigeria from 1981 to 2023. The study employed Vector Error Correction model for estimation. Result shows that domestic investment has positive and significant effect on economic growth at 5% level. However, the effect of security threat and exchange rate on economic growth is negative and significant at 5% level. The study found that trade openness improved economic growth positively and significant at 5% level. The interactive effect of domestic investment and security threat on economic growth is negative and the coefficient is statistically significant at 5% level. The study concludes that domestic investment improves economic growth in Nigeria, while security threat hinders economic growth. The study recommended that Nigerian government should improve on providing domestic investment policies since it improves economic growth in Nigeria while intensifying measures to reduce security threat by adopting strides such as implementing state policing to address prompt security issues in the country.