Economic Freedom and Economic Growth in Nigeria

Abiola L. AINA; Olubunmi I. OLAIFA

Abiola L. AINA Ajayi Crowther University, Oyo, Nigeria
Olubunmi I. OLAIFA Akintola University of Technology, Ogbomosho, Nigeria

Keywords: Economic freedom, economic growth, foreign direct investment, secondary school enrollment

Abstract

Nigeria has consistently pursued sustainable economic growth, aligning with the Sustainable Development Goals (SDGs), yet challenges such as regulatory inefficiencies and market distortions persist. Economic freedom, which includes trade openness, property rights, and investment policies, is considered a crucial driver of growth, but its precise impact in Nigeria remains unclear. This study investigated the effect of economic freedom on economic growth in Nigeria from 1980 to 2023. The Autoregressive Distributed Lag (ARDL) model and the frequency domain Granger causality test were employed for the analysis. The findings revealed that economic freedom had a negative and significant impact on economic growth in both the short run and long run, suggesting that increased economic freedom may have led to market inefficiencies, regulatory weaknesses, and unequal wealth distribution, which hindered overall economic performance. Furthermore, the causality test showed no evidence of a causal relationship between economic freedom and economic growth in Nigeria, indicating that neither variable drives the other. Based on these findings, the study recommended that policymakers focus on implementing balanced regulatory frameworks that promote economic freedom while ensuring effective market oversight, fair competition, and institutional stability to foster sustainable economic growth.