CHAPTER ONE

1.1 Introduction - - - - - - - - - 1

1.2 Statement of the problem-- - - - - - - - 2

1.3 Objective of the study- - - - - - - - - 3

1.4 Research questions.- - - - - - - - - 3

1.5 Justification of the study- - - - - - - - - 3

1.6 Scope of the study.- - - - - - - - - 5

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction - - - - - - - - - - 6

2.2 Empirical Review of Literature- - - - - - - - 6

2.3 Review of Empirical Studies in Nigeria. - - - - - - 6

2.4 Theoretical Review of Literature.- - - - - - - 26

2.4.1 Production Theory Perspective.- - - - - - - 26

2.4.2 Economic Growth theory Perspective- - - - - - - 27

2.5 Theoritical framework- - - - - - - - - 28

CHAPTER THREE

METHODOLOGY

3.0 Introduction - - - - - - - - - - 29

3.1 Specification of the Model- - - - - - - - 29

CHAPTER FOUR

4.1 Introduction - - - - - - - - - - 33

4.2 Descriptive Analysis. - - - - - - - - - 33

4.2.1 Nigerian Transportation Infrastructure in Perspective- - - - - 33

CHAPTER FIVE

Summary, Conclusion and Recommendation

5.0 Introduction- - - - - - - - - - 41

5.1 Summary- - - - - - - - - - - 41

5.2 Conclusion- - - - - - - - - - 42

5.3 Recommendation- - - - - - - - - - 42

References
ROLE AND PROBLEM OF TRANSPORTATION ON NIGERIA ECONOMIC

GROWTH
 CHAPTER ONE

1.1 INTRODUCTION

Nigeria became independent in 1960, having a population of over 150 million people

with diverse culture and abundant resources. Nigeria has a very large labour force to support the

labour market and economy which consists of different sectors, such sector includes the

Agriculture sector, the Energy sector, the Mining sector, the Manufacturing sector, the Banking

sector, the Communication sector, the transportation sector and so on.

Many economists have been interested in factors which can cause the growth of their

nations, one major factor is transportation. The study of Transportation in Nigeria has become

important due to the view or thought of researchers trying to formulate better policy that will

affect the transport sector positively which will later bring about an efficient, effective and

standard transport system. Thus the demand for Transport service in the country over the year

has increased rapidly, while the supply of transport services has declined due to lesser

infrastructure in place in the system, because a well-functioning and integrated transport system

among other thing in the economy stimulates national growth and development which enhances

the quality of life for all enabling the seamless movement of goods and services and people,

through the provision of vital linkages between spatially separated facilities which enables social

contact and interaction possible and also providing access to employment, health, education, and

other services which brings about civilization.

For instance, Agricultural products generated in the rural areas needs to be carried/taken to the

urban centres for further distribution which can take place or be achieved only through means of

transporting those goods from that place to another, here transportation provides the means by

which product are circulated around the country. The evolution to modern transport system in
Nigeria can be viewed from two phases according to the federal government of Nigeria draft on

national transport policy on august 2020.The first phase is the colonial period that marked the

origin of modern transport system.

The networks of rail, water and road developed then were geared essentially to meet the

exportation of cash crops, such as groundnuts, cocoa, cotton and palm products and to the

importation of cheap, mass produced consumption goods. These early transport systems were

planned in the most economical way possible, as typified in sub-standard road and rail

alignments and a sub base, which later proved inadequate to accommodate heavy vehicles. The

second phase is the postcolonial period/attainment of independence. With a reorientation of

goals, transport became one of the instruments of unification of the country and an important tool

for social and economic development. The development of petroleum resources from the 1950‟s

had significant Role and problem on the nation’s social and economic growth, putting increasing

demands on the transport system.

This study will examine the Role and problem of transportation infrastructure on economic

growth in Nigeria by evaluating the relationship that exists between transportation infrastructure

and economic growth.

1.2 STATEMENT OF THE PROBLEM.

Given the fact that transportation Infrastructure is very crucial to the growth of the economy, the

situation of Nigeria transportation infrastructure is at a poor state. Recent studies by Adeniji

(2020), Innocent C. Obi (2022) shows that: less than 50% of the National road network are in

fair or good condition causing an average death of 50 people per day; Less than 300,000 tonnes

of freight and less than 2.3 million passenger are been transported by rail; More occurrences of

air crashes in the Aviation sector; High rate of congestion in the sea port; and More vandalization
of pipeline. When all this losses are added up to economic cost for loss of productive man-hour,

it becomes clear that the situation really need urgent attention. However, various research studies

have been descriptive showing the importance of having a better transportation infrastructure in

place so as to increase the sector contribution to economic growth and development, although

there are few study that are empirical. Thus, this study will enlighten us on the situation and

empirical linkage of transportation infrastructure improvement and economic growth, in which

more emphasis will be on Nigeria transport infrastructure.

1.3 OBJECTIVE OF THE STUDY.

The broad objective of this study is to examine the Role and problem of transportation

infrastructure improvement on economic growth in Nigeria. The specific objectives of the study

are as follows:

i. To describe the role and problems of transportation infrastructure in Nigeria.

ii. To evaluate the empirical linkage between transportation and economic growth.

iii. To access the channel through which transportation affect economic growth.

1.4 RESEARCH QUESTIONS.

Based on the problems of the research topic, the research questions are as follow:

i. What is the situation of transportation infrastructure in Nigeria?

ii. What is the empirical linkage between transportation and economic growth?

iii. What channel does transportation work through to affect economic growth?

1.5 JUSTIFICATION OF THE STUDY.

The study is justified by the need to provide empirical understanding of the Role and problem

of transportation infrastructure improvement to the economic growth of Nigeria and how it

influences the development process. Thus, there is no doubt that transportation is essential in
operation of a market economy; Planners needs guidance based on solid grounds, to aid in their

decision to improve existing transportation and build new infrastructure. As stated by Boopen

(2019), Transport improvement have opportunity cost in terms of alternative investment that can

be carried out by the government. To ensure that resources are well allocated, policy makers

need to have empirical base on which to draw their plan. An empirical knowledge of how

transportation infrastructure improvement will affect economic growth need to be established so

that adequate plan can be made for the transport sector.

Also, there is the need to have a direct linkage between transport infrastructure and economic

growth, in which prediction can be made to determine the level of transport investment that can

achieve a desired level of economic growth.

If capital improvements in transportation facilities lead to greater development than when capital

is used in other areas, then planner should realize the benefits to be gained by developing the

transportation infrastructure. If on other hand, capital improvement in transportation facilities

cannot be linked to economic performance, then scarce resource could, perhaps, be put to better

use. There is therefore the need to examine the linkage between transport infrastructure and the

economic growth of developing countries, particularly Nigeria, in order to help policy makers

formulate policies that will favour the transport sector to enhance growth of economy. To the

people, this study will enlighten them more on the important of having a better transport system;

To students and researchers, this study reveal the current situation in the sector by adding to the

work done by other researcher so as to provide base for future research; To the policy maker this

study will reveal the state of transport infrastructure across the country making them known that

more funds and implementation of policy already made is needed critically to be in place in the

sector.
1.6 SCOPE OF THE STUDY.

This study is a macro-study that covers the transportation in Nigeria economy as a whole.

The data generated covers the contribution of the sector to GDP from the year 2019 to 2022.

The concept of economic growth has to do with the entire economy; hence the study is a macro

study, Also the choice of time frame is as a result of the limited access to data. Likewise, data

availability also pose problem in the water and air transport network.
 CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTION

In this present section, the various literatures on Role and problem of transportation

infrastructure improvement on economic growth in Nigeria will be reviewed. This study of

literature will be classified into three broad groups.

1. Empirical review of literature.

2. Theoretical review of literature.

3. Theoretical framework.

2.2 EMPIRICAL REVIEW OF LITERATURE.

In this section, we will be reviewing studies that have examined the relationship between

transport infrastructure and economic growth, through the use of data and analytical techniques,

whereby those studies that specify an aggregate production function that have included some

transportation infrastructure variables among the set of explanatory variables in their study. This

section will be divided into two parts for the purpose of this study:

(a.) Empirical studies focus on other countries, (b.) Empirical studies that focus on Nigeria.

The specification of transportation infrastructure among the set of explanatory variables in an

aggregated production function whereby the move to measure quantitative relationship between

growth in infrastructure and total economic growth using microeconomic model started with

Antle (1983) when he estimated a Cobb Douglas production function for developing countries

and 19 developed countries. Infrastructure was specified as the gross national output from the

transportation and communication industries per square kilometre of land area. Antle found a

strong and positive relationship between the level of infrastructure and aggregate productivity.
Mera (2019), Ratner (2019), Biehi (2020), Aschauer (2019), Binswanger et al (2017),

Binswanger et al (1989), Easterly and Rebelo (1993), and Baffes and Shah (1993) also found

transportation infrastructure was as an effective factor of production.

Thus, Aschauer (2018), investigated the role of infrastructure in development process based

on the United states, he argued that non-military public investment is far more important in

increasing aggregate productivity than military spending. He conclude that core infrastructure

such as street lights, highways, airports etc., contribute more to productivity than other form of

infrastructure, and that the slowdown of U.S productivity was related to the decrease in public

infrastructure investment. Subsequently munnell (1990), Garcia-milla and MC Guire (1992), and

Geo (1993), found high elasticity of public infrastructure investment through comparatively

lower than Aschauers. Fernald (2019) is also a study we found that explored the direction of the

causal links between infrastructure and productivity. Using data from 29 U.S. manufacturing

industries from 1953 to 1989, Fernald examined whether road investments lead to productivity

growth or whether productivity growth entails greater road construction. His research findings

suggest causation from roads to productivity implying that the productivity decline in U.S.

manufacturing after 2019 may have been a result of lower public spending on road infrastructure.

Fernald study also suggests that the marginal returns to road investments are not as high as

commonly thought, primarily because road construction offers only a one-time increase in the

level of productivity rather than a continuous series of Role and problem. Canning and

Bennathan (2020) estimated the rates of return to paved roads for a panel of 41 countries over the

past 4 decades. Canning found that the highest rates of return to road infrastructure occurred in

countries with infrastructure shortages. Canning also analysed whether physical capital, human

capital, labor, and other infrastructure variables are complements or substitutes to roads. He
found that the length of paved roads is highly complementary with physical and human capital.

However he observed that the marginal return to roads declines rapidly if the length of roads is

increased in isolation from other inputs. Canning concluded that infrastructure investments are

not sufficient by themselves to yield large changes in output. This finding is in line with Gannon

and Zhi (2020) who also concluded that transport access is complementary to other services such

as health and education which leads to economic growth.

Studies by Fan et al in rural India, China and Thailand also estimate the effect of infrastructure

investments on economic growth and poverty. By estimating a system of equations, these studies

explicitly account for the simultaneous effects of infrastructure investment in factor and product

markets. Results from these studies consistently show the importance of road investments in

promoting production growth and poverty reduction. In rural India, public investment in rural

roads was found to have had the largest positive Role and problem on agricultural productivity

growth (Fan, Hazell and Thorat, 2018). In China and Thailand, road investments were found to

have contributed significantly to growth in non-farm and total economic growth as well as in

agricultural growth (Fan, Zhang and Zhang, 2022; Fan, Jitsuchon and Methakunnavut, 2022).

Nagaraj et al (2020), Deichmann et al (2022), and Stephan (2020) have investigated the

determinants of regional economic disparities. Nagaraj et al assessed whether differences in the

availability of physical, social, and economic infrastructure explained growth performance

differentials among 17 Indian states from 1970 to 1994. Using instrumental variable estimation

techniques to account for reverse causality, they found that a 10% increase in the road network

(defined as kilometers of road per square kilometer of land) would lead to a 3.4% increase in

income per capita. They also found that power consumption and health conditions are positively

correlated with the availability of road infrastructure.

Specifically, Deichmann et al aimed to assess the importance of differences in the quality of

infrastructure in explaining productivity differentials. To account for quality, the authors

developed a market access indicator defined as the size of the potential markets that can be

reached from a particular point given the density and quality of the transportation network within

that region. The econometric results presented in the study show that a 10% increase in market

access increases labor productivity by 6%.

Stephan also found that differences in the level and quality of transportation infrastructure are

significant in explaining differentials in regional economic performance. He studied the effects

of road infrastructure on productivity for 21 French regions and 11 West German Federal States

and concluded that regional road infrastructure has a significant Role and problem on regional

output.

Limao and Venables (2019) elaborated on how the presence or absence of infrastructure

influences access to trade. They constructed an infrastructure index that combines road, rail, and

telecommunications densities. Using econometric methods, Limao and Venables studied the

determinants of transportation costs. They showed that infrastructure is a significant determinant

of transportation costs, and that when a region is landlocked, transport costs can by 50% higher.

Using these findings along with detailed data on trade and transportation costs in Sub-Saharan

Africa, they calculated that most of Africa‟s poor trade performance is the result of poor

infrastructure. This finding concurs with similar findings by Delgado et al (1995).

Calderón and Servén (2020) conducted a study to determine the effects of infrastructure

development on growth and income distribution, argued that generalized access to infrastructure

services play a key role in helping reduce income inequality. They found that growth is

positively affected by the stock of infrastructure assets and that income inequality declines with
higher infrastructure quantity and quality. Positive and significant output contributions were

found of three types of infrastructure assets – telecommunications, transport and power. The

estimated and marginal productivity of these assets were also found to significantly exceed that

of non-infrastructure capital. They also conjecture that a major portion of the per-capita output

gap that opened between Latin America and East Asia over the period between the 1980s and

1990s can be traced to the slowdown in Latin America‟s infrastructure accumulation in those

years. These findings are supported by similar empirical studies using cross-country panel data

by Canning (2019), Demetriades and Mamuneas (2020), Roller and Waverman (2021) cited in

Calderen and Serven (2018) confirming the significant output contribution of infrastructure.

Sanchez-Robles (2017) also found that summary measures of infrastructure were positively and

significantly related to growth in GDP per capita.

According to Fedderke and Bogetić (2018), underinvestment in the 1990s in infrastructure

(such as road, railways, electricity, pipeline, etc) in Latin America and sub-Saharan Africa led to

lower economic growth contributing to the “lost decade” directly and indirectly via access to and

quality of basic services such as water and sanitation. They note that in Lesotho infrastructure

deficiencies have been found to have directly constrained private sector activity and economic

growth and that even in countries such as Botswana and South Africa, the SACU (South African

Custom Union) countries with the highest gross national income (GNI) per capita and strong

overall economic management, new debates have resurfaced on the adequacy of infrastructure

performance in the context of the need to sustain and accelerate economic growth.

Leipziger, Fay, Wodon and Yepes (2023, cited in WBDR (World Development Bank Report)

Equity and Development 2018), based on a sample of 73 countries, found that a 10 percent

improvement in a country‟s infrastructure index is associated with a 5.0 percent reduction in

child mortality, a 3.5 percent reduction in infant mortality, and a 7.8 percent reduction inmaternal

mortality, controlling for incomes and the availability of health services.

Furthermore micro evidence, from rural India, seems to lend support to the cross-country

findings: the prevalence and duration of diarrhea among children under five are significantly

lower for families with piped water. Investments in basic water and energy infrastructure can

improve gender equity. Around the world, the burden of gathering and transporting fuel wood

and water traditionally falls on women and girls. In Ghana, Tanzania, and Zambia women

account for two-thirds of all household time devoted to fuel collection, while children – mostly

girls – account for between 5 and 28 percent of time spent on these activities.

The findings of a study conducted by Easterly and Rebelo (1993), after controlling for other

variables that could affect growth, was that transport and communication investment was

consistently positively correlated with a very high coefficient. More significant though was the

finding that infrastructure investment was uncorrelated with private investment, which suggests

that infrastructure raises growth by increasing the social returns to private investment and not by

promoting private investment itself. It must be noted that not all categories of public investment,

referring to infrastructure investment, were positively correlated with growth and the study,

however, does also not exclude the possibility of reverse causation i.e. growth encouraging the

need for infrastructure investment.

Wheeler and Mody (2021) (cited in Kessides 1993:12) conducted a study to examine panel data

on 42 developed and developing countries to explain patterns of FDI in manufacturing and

electronics through variables representing features of comparative advantage (labour cost,

corporate taxation, market size, etc.), agglomeration benefits (infrastructure quality, degree of

industrialization, and level of past FDI), socio-political risk, and openness of economic policy.
They found that among the developing countries, infrastructure quality is found to be the

dominant explanatory factor in both manufacturing and electronics investment. Among the

industrial economies, they found the two agglomeration measures other than infrastructure

quality to be dominant, presumably because the developed countries already had fairly adequate

infrastructure. It can, therefore, be concluded that infrastructure quality forms an integral part to

determining the Role and problem of infrastructure on economic growth.

According to Rioja (2001), most economists agree that public infrastructure is important for a

country‟s growth. He stipulates, however, that in developing countries, much attention is usually

devoted to the building of new public infrastructure projects and that filling the potholes that

invariably appear with time and usage receives much less attention. He cites that the WBDR

(1994) estimates that an additional USD12 billion spent on timely road maintenance in Africa

during the 1980s could have saved USD45 billion spent in reconstruction. According to the same

report, spending of USD1 million to reduce power line losses could have saved USD12 million

in generating capacity. He postulates that maintenance disregard leads to road deterioration,

irrigation canal blockage, leaks, and power line breakdowns reducing an economy‟s productive

capacity. These findings were supported by empirical evidence from Davarajan, Swaroop and

Zou (1996) (cited in Rioja (2001) in a study conducted on developing countries revealed that

public expenditures on maintenance of infrastructure had positive effects on GDP whereas

capital expenditures on new infrastructure had negative effects on GDP. This point is further

illustrated in Fay and Morrison (2018) in that Latin American and Caribbean countries, in the

last decade, have not spent enough on infrastructure and have lagged behind East Asian

comparators, middle-income countries in general and China, in terms of both coverage and

quality, despite positive Role and problems of private sector involvement. They suggest the
region should focus on upgrading their infrastructure, as this can yield good dividends in terms

of growth, competitiveness and poverty reduction, as well as improving the quality of life of

their citizens.

According to the WBDR (Equity and Development 2018), economic opportunities are strongly

shaped by access to infrastructure. The findings of its research are that in more unequal societies,

those without influence receive less and lower-quality access to public services – this often

means the poor, due to the fact that much infrastructure is traditionally government provided and

so is driven by the political process. This inequitable access also applies to remote regions and

excluded groups, and sometimes it has a gender dimension. The report concludes that in the case

for land, more equal access to infrastructure would be good for equity and will often be good for

growth. This requires addressing difficult financing issues, constraints that limit the poor‟s

ability to access infrastructure, and major accountability issues through institutional designs that

support a more equitable response to needs. In its survey of a wide body of literature and

research conducted, it found solid evidence that infrastructure investments broaden opportunities

for people and communities by integrating them into regional and national systems of production

and commerce, and by improving their access to public services.

Empirical evidence, as found by Dollar and Kray (2020) (cited in Francois and Manchin

(2007), supports the characterization of developing countries as belonging either to a cohort of

countries that are deepening linkages with the global trading system (globalizes), or those that do

not. The result is that the globalizes (like China and India) have seen rapid growth in trade

(mainly exports), and this growth has been linked to accelerating growth rates, pushing GDP per

capita on a catch-up path with the OECD (Organisation for Economic Co operation and

Development)and driving poverty rates down in the process (Sala-i-Martin (2018), cited in
Francois and Manchin (2007). At the same time, there is another cohort of developing countries

(many in Africa) that have been left behind, meaning that those countries have not experienced

rapid trade growth, or the related mechanisms that signal deeper integration into the global

economy.

The study conducted by Fedderke, Perkins and Luiz (2018) employing the Pesaran, Shin and

Smith F-tests model, found the following:

 The relationship between economic infrastructure and growth appears to run in both

directions, which suggests that inadequate investment in infrastructure could eventually lead

to bottlenecks, and opportunities for promoting economic growth could be missed;

 South Africa‟s stock of economic infrastructure developed in phases indicating that

policymakers should focus on choosing or encouraging the right type of infrastructure at the

right time; and

 The need for investment in economic infrastructure is always required and that maintenance

and expansion of infrastructure are important dimensions of supporting economic activity in

a growing economy.

In a further study conducted by Fedderke and Bogetić (2020), empirical explorations of the

growth and productivity Role and problems of infrastructure in South Africa were found to be

characterized by ambiguous (countervailing signs) results with little robustness. They suggests

that their contradictory findings could be as a result of crowding-out of private by public sector

investment, non - linearity‟s generating the possibility of infrastructure overprovision,

simultaneousness between infrastructure provision and growth, and the possibility of multiple

(could be indirect) channels of influence between infrastructure and productivity improvements.

Amis and Kumar (2020) investigate the relationship between urban economic growth, the
provision of urban infrastructure and poverty reduction in Visakhapatnam, one of the largest

port and industrial towns in India. In the study the authors identify many dimensions of poverty,

including inadequate income, lack of assets („no shelter, no property, no gold‟), lack of support

(especially for widows, deserted women and the handicapped), illness and debt. The results of

this participatory study indicate that the city‟s growth was constrained by inadequate investment

in infrastructure, especially for water and electricity. This study suggested that the provision of

physical and social infrastructure is important for poverty reduction.

Canning and Bennathan (2020) compare the relative Role and problem of infrastructure

investment in electricity generation and paved roads in 52 and 41 countries, respectively. These

authors find that (i) the return to investment on electricity generation is likely to be higher in low

income countries; (ii) the return on investment from paved roads is likely to be higher in middle-

income countries due to the low costs of road construction in these countries relative to low-

high-income countries; and (iii) both types of infrastructure generate less return on investment

when not combined with human capital interventions. The study shows that the rate of return to

infrastructure investment may vary depending on the income level of the country and the type of

infrastructure. The study also suggests that infrastructure in isolation has limited Role and

problems on economic growth, and that there should be a mixture of physical and human capital

investment to maximize the return. Moreover, in a comparative study based in India and China,

Pasha and Palanivel (2020) argue that for growth to contribute to economic growth, it must

generate employment and income for the poor and stabilize the supply of goods and services on

which the lives of the poor heavily depend.

In another study, Fan, Zhang and Zhang (2022) analyse the effects of different types of public

expenditure on growth and rural poverty across Chinese provinces, distinguishing between
expenditure on rural education, targeted poverty alleviation, telecommunications, irrigation,

power generation, agricultural R&D and rural roads. These authors find that spending on rural

roads has the largest Role and problem on poverty and economic growth. The estimated

elasticities with respect to road density are 0.08 for agricultural GDP per worker, 0.10 for

nonagricultural employment, and 0.15 for wages of non-agricultural workers in rural areas.

Among government infrastructure projects, rural roads are found to have the largest Role and

problem on poverty incidence: for every 10,000 yuan invested in rural roads, 3.2 poor persons

were estimated to be lifted out of poverty.

Jalilian and Weiss (2020) explore the nexus between infrastructure, growth and poverty using

samples of countries from Africa, Asia and Latin America. Applying different theoretical and

empirical techniques, they obtain results from the estimation of the „ad hoc model‟ showing

that on average, a 1 per cent increase in infrastructure stock per capita, holding human capital

constant, is associated with a 0.35 per cent reduction in the poverty ratio, when poverty is

measured by US$1/day poverty headcount, or 0.52 per cent when it is measured by US$2/day

poverty headcount. This study suggests that while infrastructure investment in general has a

role to play in poverty reduction and on economic growth, such that physical infrastructure

investment needs to be very substantial and must be supported by factors such as improvement in

social infrastructure so as to promote rapid reductions in poverty and increase in economic

growth.

To provide more insights into the link between infrastructure and poverty reduction, Fan and

Chan-Kang (2020) further examine the Role and problem of public infrastructure on growth

and poverty reduction in China. In the study, particular attention is paid to the contribution of

roads. This study indicates that low quality (mostly rural) roads have benefit-cost ratios for GDP
that are about four times larger than the benefit-cost ratios for high quality roads. The study

suggests that in terms of poverty reduction, low quality roads raise far more rural and urban poor

above the poverty line per yuan invested than do high quality roads.

Anderson, Renzio and Levy (2018) maintain that public infrastructure produces two main effects

which are microeconomic and macroeconomic in nature. According to these authors, the

microeconomic effects of public investment produce two main Role and problems, quantity

effect and price effect. A public infrastructure investment increases the quantity and/or quality of

public goods and services. Since public goods are exclusively produced by the government, the

quantity of these goods is initially rationed by firms and households. However, with additional

public infrastructure investment, there is an increase in the quantity and/or quality of this

rationed good, therefore benefiting both firms and households in the process. In this case, much

public infrastructure provides direct welfare benefits in the form of increased quantity and/or

quality of final goods and services.

Jahan and Mcleery (2018) emphasize that infrastructure development can lead to poverty

reduction and increase in economic growth through direct or indirect channels. Through the

direct channel it reduces poverty as people’s access to health and educational services, there is

cleaner energy available and the government provides for protection against national disasters.

The indirect effect of infrastructure provision on poverty occurs when the productivity of

workers increases, transport costs are reduced and more employment is generated, thereby

leading to economic growth. This implies that infrastructure provision can have economic and

social Role and problems on the lives of people.

Jahan and Mcleery (2018) also argue that the Role and problem of infrastructure on economic

growth and poverty reduction takes the form of first-round effects, followed by subsequent Role

and problems.

In the first round, infrastructure development produces two initial effects that could lead to

poverty reduction through economic growth. These two initial Role and problems are the supply

side and demand side Role and problems. The development of infrastructure improves the supply

side of the economy by reducing cost, enhances the business climate, makes room for better

access to market opportunities and opens up new opportunities. These supply side effects attract

domestic and foreign investment, increasing employment and national output. The demand side

effect of infrastructural development occurs when projects are implemented. In this case, the new

project, say road construction, creates new jobs through which incomes are generated. The social

dimension of better infrastructure is that it increases access to basic social services, thus

improving the living conditions of the poor. The subsequent effect of infrastructure development

arises from fiscal revenue generated from it. As fiscal revenue increases through growth,

additional budget can be generated for programmes that improve the living conditions of the

poor.

Cesar Calderon (2009), provided a comprehensive assessment of the Role and problem of

infrastructure development on growth in African countries based on econometric estimates for a

sample of 136 countries from 1960-2018. He evaluated the Role and problem on per capita

growth of faster accumulation of infrastructure stocks and enhancement in the quality of

infrastructure services for 39 Africa countries in 3-key infrastructure sectors:

telecommunications, electricity, and transportation (i.e road). Using an econometric technique

suitable for dynamic panel models and likely endogenous regressors, the authors find that
infrastructure stocks and services quality boost economic growth. The findings show that growth

is positively affected by the volume of infrastructure stocks and quality of infrastructure services

simulations show that our empirical findings are significant statistically and economically.

Romp and de Haan (2018) note that 32 of 39 studies of OECD countries found a positive effect

of infrastructure on some combination of output, efficiency, productivity, private investment and

employment. (Of the rest, three had inconclusive results and four found a negligible or negative

Role and problem of infrastructure). They also review 12 studies that featured developing

countries. Of these, nine find a significant positive Role and problem. The three that find no

Role and problem rely on public spending data which is a notoriously imprecise measure,

especially for cross-country analysis. Other meta-analysis also shows a dominance of studies that

point to a generally significant Role and problem of infrastructure particularly in developing

countries. Calderon and Serven (2020) report that 16 out of 17 studies of developing countries

find a positive role and problem as do 21 of 29 studies of high income countries. Briceño et al

(2020) carry out a similar review of about 102 papers and reach similar conclusions.

Ayogu (2017) provides a survey of the empirical literature. Most of the studies deal with the

growth and productivity effects of infrastructure development. For example, Estache, Speciale

and Veredas (2018) present pooled OLS (in full) growth regressions based on an augmented

Solow model, including a variety of infrastructure indicators. Their main conclusion is that

roads, power and telecommunications infrastructure with the exception of water and sanitation

contribute significantly to long-run growth in Africa.

Perkins, Fedderke and Luiz (2018) use a detailed database on infrastructure investment and

capital stocks, spanning as long as a hundred years, to test for the existence of a long-run relation

between different infrastructure measures and GDP, which the found to exist.
Estache et. al (2018) demonstrate that over the last 30 years, infrastructure investments

accelerated the annual growth convergence rate by over 13 percent in Africa. The strongest Role

and problem comes from telecommunications, followed by roads and electricity. However, the

evidence on the link of access to water or sanitation is more tenuous. This is probably because

this sector has the highest correlation with health or education as well as with the other

subsectors. The importance of the water and sanitation sector is particularly strong in Africa

when it is considered in isolation from the effects of other sectors (Estache, 2010). Calderon

(2008) recently estimated that across Africa, infrastructure contributed 99 basis points to per

capita economic growth over the period 1990 - 2018, compared with only 68 basis points for

other structural policies. That contribution is almost entirely attributable to advances in the

penetration of telecommunication services. The deterioration in the quantity and quality of power

infrastructure over the same period has had a significant retarding effect on economic growth. If

these deficiencies could be eliminated, the effect would be remarkable. Calderon„s simulations

suggest that if all African countries were to catch up with Mauritius in infrastructure, per capita

economic growth in the region could increase by 2.2 percentage points.

An analytical approach proposed by Calderon and Serven (2020), Estache and Woodon (2010)

calculated the increase in the average growth of GDP per capita that 21 African countries would

have had if they had been able to rely on the infrastructure stocks and quality of South Korea

during the period 1996-2020. Catching up with Korea„s level would bring about economic

growth per capita up to 1.1 percent per year as shown in Table 8. In a number of countries,

including Ethiopia, Mali and Mauritania, the Role and problem would be even larger. For

instance, if Burkina Faso had enjoyed Korea„s infrastructure quantity and quality, its per capita
GDP growth rate would have been 2.18 percent (0.59 Actual+1.59 Potential point increase)

instead of 0.59 percent.

Hulten (2020) and Canning and Pedroni (2020) emphasize that there is an optimal level of

infrastructure maximizing the growth rate and anything above would divert investment from

more productive resources , thereby reducing overall growth. However, the study by Romp and

De Hann (2007) suggests that public capital may, under specific circumstances, raise income per

capita in general.

In his contribution to empirical analysis of transport - economy linkage, Zhu (2009), applied

production function approach on panel data covering the period between 1992 and 2020 to

compare transport-economy linkage of developed countries and developing countries. His results

indicate that physical units of transport infrastructure are positively and significantly related to

economic growth and the output elasticity with respect to physical units for developed countries

is higher than developing countries.

Boopen (2018), analyzed the contribution of transport capital to growth for a sample of Sub

Saharan African (SSA) and a sample of Small Island Developing States (SIDS), using both cross

sectional and panel data analysis. In both cases, the analysis concluded that transport capital has

been a contributor to the economic progress of these countries. Analysis further revealed that in

SSA case, the productivity of transport capital stock is superior as compared to that of over all

capital while such is not the case for the SIDS where transport capital is seen to have the average

productivity level of over all capital stock. However, research of transport investment and

growth in developing economies includes the work of, Demurger, (2001 cited Zou, 2008)

examines data of 24 provinces of China in 1985- 1998 and points out that the inequality of

transport infrastructure is one of the main factors leading to growth inequality across provinces
in which infrastructure endowment along with reform openness, geographical location account

significantly for observed differences in growth performance across province. Using a time

series analysis for the investment into road infrastructure and economic growth in South Africa,

Fedderke et al (2018 cited Moctezuma 2008) find that road infrastructure does indeed lead to

economic growth in South Africa both by boosting GDP directly and by raising the marginal

products of other production factors.

Other studies reported that the importance of infrastructure on economic development has been

over emphasized. For instance, Neuser (1993) using public data from Ford and Poret (2021) for

the GT countries over the period 1970-2017, applied total factors productivity growth and co-

integration techniques to the sample. He reported insignificant and unstable results. Tatom

(2021) also confirmed that public sector capital investment has no significant effect on output of

the private sector and investment.

Duranton and Turner (2008) estimated the effects on major cities of major roads and public

transit on the growth of major cities in the US between 1980 and 2020 and found that a 10

percent increase in city‟s stock of roads causes about a 2 percent increase in its population

and employment and a small decrease in its share of poor households.

Zou, et al (2008) in their own study of transport infrastructure, growth, and poverty alleviation in

East and central China with panel data of 1994 to 2022 and a time series data of 1978 - 2022

reported a higher growth level from better transportation. Since increase in road safety is related

to increasing socio-economic development.

Garg and Hyder (2018) studied the trends in injury and death rates in India and analyzed these

trends in relation to economic and population growth. Using linear regression models to test „a

priori‟ hypothesis of a positive relationship between net domestic product (NDP) and death rates
from road crashes, they reported an inverted U-shaped relationship between injury, death rates

and NDP authenticating Kuznets phenomenon for within-country level comparisons. He

therefore recommended a state investment in road safety in addition to any overall national

efforts.

Pravakar sahoo, Ranjau Kumar Dash, and Geethanjali Nataraji(2010), investigated the role of

infrastructure in promoting economic growth in china for the period of1975 to 2007, using

GMM(Generalized Methods of Moment) and ARDL(Autoregressive distributed lag model)

techniques the result reveals that infrastructure and investment have played an important role in

economic growth in China.

National Institute of Economics and Industry Research (NIERI),2022, proved the link between

transport infrastructure investment and economic growth using a Cobb Douglas production

function. In which to achieve the efficient of transport infrastructure, a link should be forged

between information technology and management and transport infrastructure.

However, the effect of public capital or infrastructure differs across countries, regions, and

sectors depending upon quantity and quality of the capital stock and infrastructure development.

2.3 REVIEW OF EMPIRICAL STUDIES IN NIGERIA.

In Nigeria we have limited numbers of studies that estimated the contribution of investment

in transportation infrastructure on economic growth. However we will review few study that

have measured the Role and problem of infrastructure particularly those relating to

transportation and economic growth.

Imobighe and Awogbemi (2018) regressed private capital stock, non-military, net investment,

time to capture the effects of the technical changes in economic growth, one year lag GDP and

electricity supplied against Gross Domestic Product to assess the Role and problem of capital
stock in Nigeria‟s economic growth from 1980-1998. They found gross domestic product to be

positively related to private capital stock by one year lag GDP t-1 and electricity supply was

negatively related to recurrent and capital expenditure, except expenditure on defense and

technical change. They further found that while lagged value of gross domestic product

significantly increases output in Nigeria, other explanatory variables were, individually

insignificant in explaining output in Nigeria.

Loto (2018) also found that infrastructure, when measured in physical sense, Role and problems

positively on economic growth.

Nogzi and Mulikat (2010) estimated the contribution of transportation investment, congestion

and traffic related accident to economic growth in Nigeria between 1975 and 2018, using the

extended Cobb Douglas production function model found that transport investment positively

contributes to economic growth and traffic accidents contributes negatively. The estimated

model used was the error correction mechanism with the real Gross Domestic Product as the

dependent variable and the explanatory variables include physical capital, labour force, total road

network, automobile density and traffic related accident.

Jerome and Ariyo (2020) explore the Role and problem of infrastructural reforms (that is,

implementation of privatization and liberalization in telecommunications and private investment

in infrastructure) on poverty reduction. The study notes that infrastructure reforms and

privatization in Africa have been carried out without considering the needs of the poor and

without meeting the policy preconditions that are indispensable for their effectiveness.

The consequence of this is that infrastructure privatization, rather than having a positive Role

and problem, has negatively affected the poor in Africa. The authors argue that the goals of
infrastructure reforms can only be achieved if such reforms are undertaken in the context of

appropriate market and regulatory frameworks.

Akinbobola and Saibu (2020) investigate the nexus between income inequality, unemployment

and poverty in Nigeria using a vector autoregressive (VAR) approach. In this study, quarterly

data on real per capita income, government capital expenditure, unemployment rate and the

human development index were sourced for the period 2020 and used for the analysis. The

results from the four-variable VAR model show that reduction in unemployment rate improves

human development and consequently reduces poverty. Moreover, growth in public expenditure

reduces unemployment and improves the human development index. The study suggests that

infrastructure-based policies, which initially reduce unemployment, would also improve the

living conditions of Nigerians.

T.P.Ogun (2010), investigated the Role and problem of infrastructural development on poverty

reduction in Nigeria. Specifically, the relative effects of physical and social infrastructure on

living standards or poverty indicators are examined, with a view to providing empirical evidence

on the implications of increased urban infrastructure for the urban poor. The paper employs

secondary data for the period 1970 to 2018 and the structural vector autoregressive (SVAR)

technique is adopted in the analysis. The study unequivocally finds that infrastructural

development leads to poverty reduction which leads to increase in economic growth. Results also

show that though infrastructure in general reduces poverty and increase economic growth, social

infrastructure explains a higher proportion of the forecast error in poverty indicators relative to

physical infrastructure. This suggests that massive investment in social infrastructure in cities

would drastically reduce poverty and increase growth in the urban areas.

From the above overview, there is a substantial body of literature that found that infrastructure
investment is largely positively correlated with aggregate economic growth and also with social

indicators. The Role and problems are found to be larger in developing economies than

developed economies. However, consideration to either new infrastructure investment or the

expansion and maintenance of existing infrastructure investments should be given to gain

optimal Role and problem, as well as the quality of infrastructure that is to be constructed.

However, the link between transportation infrastructure and economic growth is not simple but

rather a complex one. Transport infrastructure development can directly or indirectly lead to

economic growth. It has also been emphasised that the extent to which infrastructure leads to

economic growth depends on the quality of governance and the institutional setting.

2.4 THEORETICAL REVIEW OF LITERATURE.

2.4.1 Production Theory Perspective.

According to D.N.Dwivedi, Production theory deals with qualitative relationships, that is

technical and technological relations, between inputs, especially labour, capital, and between

output and inputs. Production means transforming input into output. For example, transporting a

commodity from one place to another where it can consume or used in process of product in

production. Transporting men and materials from one place to another is a productive activity: it

produces service. Production function is derived from the production theory. Production function

is a tool of analysis used to explain the input-output relationship. It can take the form of a

schedule or a table, a graphed line or a curve, an algebraic equation or a mathematical model. An

empirical production function is; Q = f (Ld, L, K, M, T, t). Here Ld= Land, L= Labour, K=

Capital, M= Material, T =Technology, t =time. For the sake of convenience and simplicity in the

analysis of input-output relations economists have reduced the number of variable used to

Capital (k) and Labour (L) now having the production function to be Q = f(L,K).
Cobb-Douglas production function is a production function widely referred to in economics

literature whereby it is a production function with a power function. It is of the form Q = AKªL¹ˉª

where A is a positive constant; a and 1-a are positive fractions.

2.4.2 Economic Growth Theory Perspective.

In this session, the study explores the historical and intellectual evolution in the scholarly

thinking about how and why growth does or does not take place. The classical theories of

economic growth have been dominated by major strands of thought such as:

1.) The Solow neoclassical growth model.

i. The Solow Neoclassical Growth Model: This theory is an alternative to Harrod-Domar model

line of thought without its crucial assumption of fixed proportion in production. He postulates a

continuous production function linking output to the inputs of capital and labour which are

substitutable. In the process, it assumes that there are diminishing returns to the use of these

inputs. The aggregate production function, Y=f(K,L) is assumed characterised by constant return

to scale, for example, in the special cases of Cobb-Douglas production function , at any time t we

have Y(t)=K(t){A(t)L(t). where Y is gross domestic product, K is the stock of capital(which may

include human capital, physical capital etc), L is labour, and A(t) represents the productivity of

labour, which grows over time at an exogenous rate.

Because of constant returns to scale, if all inputs are increase by the same amount then output

will increase by the same amount, That is yY=f(yK,yL), here y is some positive amount. This

implies that the Generalised Cobb-Douglas production is open to the possibility of constant

return to scale it becomes Solow-type models. On the other hand, if the model admits the

possibility of constant or increase in return to capital it refers to Romer (2017) endogenous

growth model which addresses technological spill-overs that may be present in the process of

industrialization.

2.5 THEORITICAL FRAMEWORK.

One of the first systematic attempts to link transport infrastructure indirectly to economic growth

was made by John Maynard Keynes in 1936. In The General Theory of Employment Interest and

Money, Keynes argues that in an economy characterized by depression and market failure, high

public expenditure is necessary to adjust the economy back to high levels of employment. This

implies that high public investment in infrastructure would increase national income,

employment and the welfare of people.

However, existing empirical studies on the contribution of transportation infrastructure on

economic growth are essentially based on the production framework. Following Pravakar,

Ranja, and Nataraj (2010), This study will be assuming a generalised Cobb-Douglas production

function and extending the Neo-classical growth model to include transport infrastructure stock

(i.e output of the transport sector) along with capital stock (i.e investment on transport

infrastructure) as the input of the production function and the gross domestic product as the

output.

The generalized form of Cobb-Douglas production is open to the possibility of constant return to

scale as suggested by Solow-type model (Solow, 1956). On the other hand – the model also

admits the possibility of constant or increasing return to capital as suggested by some

endogenous growth model.

 CHAPTER THREE

METHODOLOGY

3.0 INTRODUCTION

This chapter presents the various components of the methodology used in the study. It contains

the area covered by the study, sources of data used in the study, specification of the model,

technique analysis. Issues bordering on the test for statistical significance of data are also

addressed in this section of the study.

3.1 SPECIFICATION OF THE MODEL

The model can be specified when an analytical framework in the form of a generalised Cobb-

Douglas production function is been taken into consideration. The production function would

include infrastructure stock that is output of transport sector as an additional input of

production function along with investment in transport infrastructure and the gross domestic

product as the output. Such that Following Pravakar, Ranja, and Nataraj (2010), This study

will be assuming a generalised Cobb-Douglas production and extending the Neo-classical

growth model to include transportation infrastructure stock (i.e output of the transport sector)

along with transportation capital stock (i.e investment on transport infrastructure) as the input

of the production function and the gross domestic product as the output. The generalized form

of Cobb-Douglas production is open to the possibility of constant return to scale as suggested

by Solow-type model (Solow, 1956). On the other hand – the model also admits the possibility of

constant or increasing return to capital as suggested by some endogenous growth model.

The Gross Domestic Product (GDP), which is the value of output produced within a country

at a particular time, usually a year, is the most recognized measure of economic growth.
Thus, to measure the Role and problem of transportation on economic growth, the value of the

GDP will represent economic growth, thus serving as a dependent variable, depending on

transportation infrastructure.

To represent transportation infrastructure at the macro level, the study make use of the output of

the transport sector (TRANSCON). It is the value of this output that shows the performance of

the sector and the Role and problem the infrastructure make in the economy. Also, the study

will attempt to measure the relationship between the investments in transportation infrastructure

and economic growth, to know what an additional investment in the sector will contribute to the

economy. To do this, the study applies the expenditure in transport infrastructure (INTRAN).

The value of this expenditure represents the investment in transportation infrastructure.

Improvement in transportation infrastructure will come about when investments in form of

government funding is been channelled into the transportation sector. Such investment in the

sector is expected to bring about some benefits in form of addition to the GDP or returns to the

economy. The variable, INTRAN, is necessary to measure the size of the response of GDP to the

investments made in the transportation sector, because it shows the actual linkage between

transportation investment and growth in GDP. The variable, TRANSCON, is necessary to

measure the proportion of the transportation sector in the GDP. It is important because it helps us

identify when the sector is not doing well, thus helping policy maker to know when is the right

time to invest in the sector.

Thus the model can be specified as this:

GDP = f (TRANSCON, INTRAN)

The above equation shows that GDP is a function of the output of the transport sector and

investment spending in the sector. It says that there is a relationship, but does not specify the
type of relationship. If assume that there is a direct economic relationship between the size of the

transportation output, transport infrastructural investment, transport employment; and GDP, it

allows that any addition to the transportation output and the other independent variables will

bring about corresponding increases in the flow of GDP. Hence, we can state the model thus;

Log GDP = LogB0 + B1LogTRANSCON + B2LogINTRAN + U

The model is expressed in log form for the purpose of linearizing it. It is also necessary to

remove variation in the data and also to minimise bias in the data collected. (Gujarati: basic

econometrics).

The basis for formulating this model is to determine the linkage between transportation

infrastructure and economic growth, by measuring the elasticity of GDP to a change in the

transportation infrastructural investment. By elasticity, we mean the degree of responsiveness of

GDP to a change in the level of investment made in improving transportation investment.

This elasticity would be derived by the value of B 2. The model will also measure the\

relationship between the growth rate of GDP and the output of transportation sector,

TRANSCON. The value of B1 will show this relationship. The basis for this measurement is

to determine whether the transport sector contributes positively to the growth of the economy.

DEFINATION AND MEASUREMENT OF VARIABLES.

From the above model, model shows the dependent relationship of GDP on TRANSCON and

INTRAN. The variables can be defined below;

GDP: this is the real Gross Domestic Product. It is the dependent variable, whose value depends

on the independent variables. The GDP can be defined as the value of final goods and services

produced within an economy, measured at a particular time, usually a year. The term, real,
implies that the GDP is measured; using a constant price, i.e. the value of the GDP for different

year is measured, using the price of a base year.

TRANSCON: this is the output of the transport sector. It is one of the independent or

explanatory variables in the model. It is derived by summing the output from the various

transportation modes that is (road, rail, water and air). The value of the TRANSCON is the

contribution the sector and the infrastructure make to the economy and its growth.

INTRAN: is an independent variable. This is the investments made in transport

infrastructure. It is the expenditure made by the country and its government in transportation

infrastructure, in terms of paving more roads, building of railway lines, dredging of the sea,

and so on. It is measured by summing, for each tear, the values of expenditure made in the

transport sector by the government.

„U‟ is the error, disturbance or the stochastic random term which depicts other external factors

that might affect the magnitude of the GDP, not stated in the model. In this study, we are not

interested in the value of „U‟.

In the model, B1 and B2, are the slope coefficients and depict the rate of change in the value

of the GDP, when there is a unit change in the value of any of the above explanatory variables.

B0 is the intercept coefficient and it shows the rate at which GDP will change independent of the

explanatory variables.

As stated earlier, one of the specific objectives of this study is to show the empirical linkage

between transportation infrastructure and economic growth. This we will show from the above

model, using data ranging from 2019 to 2022.

 CHAPTER FOUR

4.1 INTRODUCTION

In this section of the study analysis and interpretation of the result, the empirical and descriptive

method of analysis will be utilized to achieve the earlier stated objective of the study.

4.2 DESCRIPTIVE ANALYSIS.

The situation of transportation infrastructure in Nigeria can be described by reviewing the

situation of transportation infrastructure in the country. Thus, the descriptive analysis involves

the use of tables, graph and reviews of the situation.

4.2.1 NIGERIAN TRANSPORTATION INFRASTRUCTURE IN PERSPECTIVE

In general, transportation can be through land, air, and water (Coyle et Al, 2023). Land transport

involves movement of people and goods on land, from one location to another. It is the dominant

form of transportation in the World and includes road, rail and pipeline. Road transport is the

most commonly used mode of transport in Nigeria and accounts for more than 90% of the

transport sector, contributes 3% to the Gross Domestic Product and controls over 95% of all

surface transportation with a total asset of over 3 Trillion Naira.

Nigeria has a total of 193,200 kilometres of roads, made up of 34,123 kilometres of Federal

roads, 30,500kilometres of state roads and 129,577 kilometres of local government roads

(Federal Government of Nigeria Draft National Transport Policy, 2010).

Nigeria has 3528kilometres of operated railway tracks, in which 3505kilometres are narrow

gauge tracks and 276 kilometres of standard gauge tracks. The network has been extended by a

narrow gauge line between Onne and the Enugu-Port Harcourt line and a yet to be completed

320km standard gauge line from Ajaokuta to Warri.

Pipeline transport is the newest mode of land transport. It is now widely used for the

transportation of bulk liquid and gaseous consignments over long distances. The country

pipelines are owned by both the public and the private sectors. In 2020, Nigeria had 105

kilometres of pipelines for condensates, 1896 kilometres for natural gas, 3638kilometer for oil,

and 3626 kilometres for refined products.

Nigeria has three international airports which are located in Lagos, Abuja and Kano. The various

internal flights that serve the majority of state capitals, of which Kaduna, Port Harcourt, Enugu

are the busiest.

Nigeria has 8600 kilometres of inland waterways and an extensive coastland of about 852

kilometres. Nigeria‟s largest ocean ports are at Lagos (Apapa and Tin can Island), Port Harcourt,

Calabar, Sapele, and Warri. Nigeria waterways have an average share of about 1.6 per cent of

Gross Domestic Product (Central Intelligence Agency World Factbook).

The length of roadway, railway and waterway in the country over a period of years is been

shown below.

Table 4.1 Length of Roadways, Railways, Waterways in Nigeria (1992 - 2022)

Year Railway length/km Roadway length/km Waterway

length/km

1992 3505 107990 8575

1993 3505 107990 8575
1994 3505 07990 8575

1995 3505 107990 8575

1996 3567 107990 8575
1997 3557 32105 8575
1998 3557 32105 8575
1999 3557 193200 8575

2000 3557 193200 8575

2001 3557 193200 8575

2002 3557 193200 8575

2003 3557 193200 8575

2004 3557 193200 8575

2005 3557 193200 8600

2006 3557 193200 8600

2007 3505 193200 8600

2008 3505 193200 8600

2008 3505 193200 8600

2009 3505 193200 8600

2010 3505 193200 8600

2011 3505 193200 8600

2012 3505 193200 8600

2013 3505 193200 8600

2014 3505 193200 8600

2015 3505 193200 8600

2016 3505 193200 8600

2017 3505 193200 8600

2018 3505 193200 8600

2019 3505 193200 8600

2020 3505 193200 8600

2021 3505 193200 8600

2022 3505 193200 8600

2023 3505 193200 8600

Source: CIA World Factbook.

The table above can be viewed in a graphical form as we have in FIG 4.1 below.

BAR

CHARTS OF ROADWAYS, RAILWAYS & WATERWAYS IN NIGERIA.

From the above fig, we observed that roadway has the tallest bar from year 1992 to 2022, which

shows that the most used mode of transport in Nigeria is the road. The railway and waterway bar

are small which shows that these modes of transportation are rarely used in the country.

In summary, the vast majority of Nigerian national transport movements are performed through

the road and air transport sub-sectors, with railway, waterway and pipeline playing important,

although secondary roles. Such that, Nigeria has become increasingly dependent on the road

system to meet virtually all its inland transport needs as the rail, pipeline and inland waterway

systems have deteriorated. At the same time, the road network itself has suffered from continuing

lack of maintenance and investment by the three levels of government, Federal, State and Local.
The channel through which the improvement of transportation infrastructure passes to affect

economic growth can be viewed through the saving of the labour force in which the labour force

can be saved through the reduction in the numbers of death caused by accident in transportation

whereby reduction in the death rate encountered in different transport mode accident when

reduced to the minimum tends to have a positive effect on the country growth rate because

growth rate because growth in labour force been combined with effective saving and investment

with efficiency bring about rapid growth in gross domestic product.

Federal Road Safety Commission (2018), stated that increase in the death rate is majorly caused

by the poor state of transport infrastructure. The Corp Marshall of the Commission noted that

more lives were lost through road and aircraft accident in the past years. According to the

statistical breakdown in Table 4.2, out of a total number of 21934 people involved in road

accident, 8154 people die as a result of the bad road condition. When total cases of accident

compared to GDP and viewed in a graphical form as we have in Fig 4.2 we can see the Role and

problem .

TREND OF DEATH CASUED BY ROAD ACCIDENT

From the above Fig, we observed that from the year 2001 to 2018, we can see that as the total

cases began to drop steadily, the GDP level began to rise steadily because increase in death rate

due to increase in the total cases of accident has a negative effect on the growth rate because bad

road condition which is the cause of accident is the cause of death which is a loss to labour force

in a country are factor that are responsible for this trend. A point to note is year 2019 to 2020,

where the death rate began to increase sharply, the GDP, instead of failing, began to rise, but

slowly. But it was clear that from 2001, as the death rate decreased sharply, the GDP responded

by increasing fast.
PRESENTATION OF DATA.

This section deals with the presentation of relevant data pertaining to the study. The data

collected are analysis using appropriated statistical tools.

Log GDP = LogB0 + B1LogTRANSCON + B2LogINTRAN + U.

DATA ANALYSIS AND RESULTS OF THE MODEL.

This section deals with analysis of the results obtained after estimating the specified model.

In this empirical study, the methodology used is the ordinary least square (OLS) method with

the E-view 3.1 software. The model relates economic growth to transportation output

(TRANSCON) and transportation investment (INTRAN). Thus, the second objective of the

study will be achieved in this section. The results are presented below:
STATIONARY TEST (UNIT ROOT TEST)

This test is used to determine whether the data is stationary (i.e whether it has unit roots) and the

order of integration. In this regard, the Augmented Dickey-Fuller (ADF) was used. The Unit root

test result in Appendix 3, shows that all the variables are not stationary at level but are stationary

at 2nd difference for GDP and 1st difference for TRANSCON and INTRAN which shows that the

Augmented Dickey-Fuller (ADF) values are greater than their critical values at 1%, 5%, 10%.

CO-INTEGRATION TEST (JOHANSEN COINTEGRATION TEST).

This test is use to show the long run relationship between the variables in a model. Given that all

the variables are stationary, we decided to find out whether these variables are cointegrated.

In doing this we adopted the Johansen procedure. The result of the test is presented in appendix

4. The result shows that there is no co-integration equation. This means that model equation has

to be estimated using first difference of the variable. Therefore, this suggests that there may be

long run relationship among the variables in the models at differences.

The introduction of single lagging that is the Error Correction Model (ECM) to the model is to

ensure that the results becomes more acceptable, the exponents of the explanatory variables

becomes the coefficients; this therefore qualifies the coefficients of the explanatory variables

(independent variables) as a measure of the degree of responsiveness (elasticity) of the

dependent variable to the change in the explanatory variables. The coefficients of each

explanatory variable (TRANSCON, INTRAN) are the elasticity response of the dependent

variables (GDP) with respect to relative explanatory variables.

The sign of the coefficients of the explanatory variables in the model conforms to our theoretical

expectations (B1> 0, B2 > 0), this shows that our Model agrees with a priori expectations that

denotes a positive relationship between the explanatory variables and the dependent variable.
From the regression equation above, the value of the constant term (intercept) is 2.696717. This

signifies that if the explanatory variable is held constant, the GDP is 2.696717. Thus this is the

autonomous value of the real GDP.

In the context of the computed elasticity (i.e coefficient of the explanatory variables), the result

suggested that, a unit change in transportation sector output (TRANSCON) will cause a

0.675580 unit rise in Gross Domestic Product (GDP). This means that there is low output and for

this to develop, more output from this sector will enhance economic growth. A unit change in the

transportation infrastructure investment will cause a 0.057906 unit change in Gross Domestic

Product (GDP). This means that there is low investment and for this to develop, more capital will

be mobilized and this will eventually affect the GDP positively.

SIGNIFICANCE OF ESTIMATE AND OVERALL REGRESSION MODEL.

COEFFICIENT OF DETERMINATION (R2)

The coefficient of determination (R2) is 0.979799 for the model, this indicates that there is a

very strong positive linear relationship between the dependent variables (GDP) and

explanatory variables (TRANSCON and INTRANS) and that the explanatory variable

accounted for 97.97% of the variations in the GDP in Nigeria from 2019 to 2022, While the

remaining 2.03% variation in the real GDP is explained by other exogenous variables that are

excluded in the models (error term). This implies that the coefficients are high as 98%.

Therefore the models are good fit as only less than 3% of systematic variation is left

unaccounted for by the model.

Also, a brief look at the adjusted R-squared value of 97.7% indicates that after removing the

effect of insignificant repressor‟ (explanatory variable), about 2.3% variation in the real GDP

is still accounted for by the independence variables. Therefore, the model is a good fit.
 CHAPPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.0 INTRODUCTION

This chapter will focus on the summary of findings, conclusion and recommendations of

appropriate policies. All these will be based on the results gotten from the regression and the

analysis of results.

5.1 SUMMARY

This study looked at Role and problem of transportation infrastructure improvement on

economic growth in Nigeria between 2019 and 2022 using Central Bank of Nigeria (CBN)

statistical bulletin data. Improvement in transportation infrastructure are related to transport

industry efficiency, creation of social and economic benefit, reduced cost associated with

transportation which leads to greater productivity, reduce distribution cost, thereby reduce

production cost, expand market, increase employment demand, and increasing Nationa output.

The channels through which transportation affect economic growth was viewed in the study

through saving of labour force in which having an efficient and effective mode of transport,

communication, and movement will be made easier which will save time, cost and reduce the

rate of accident. The study also showed that death rate in road accident is high which leads to

loss of live and reduction in labour force because when there is increase in accident there will

be increase in death rate which will lead to a decrease in labour force in the economy.

The empirical linkage between transportation and economic growth was captured through the

model (which made use of transport sector output, transport expenditure and gross domestic

product) which captured the relationship between transportation and economic growth through

statistical analysis. We found that economic growth is positively influenced by transportation

whereby transport output, transport investment exerts positive influence on GDP, which implies

that improvement/ increase in transport sector will lead to an increase in GDP in the country

which will bring about economic growth because transportation provide intermediate service for

Agricultural sector, Manufacturing output, investment e.t.c, which stimulate the economy to

grow.

5.2 CONCLUSION

The study reveals that there is a relationship between transportation infrastructure and economic

growth. It discovered a positive relationship between GDP, transportation investment and

transportation output. Thus an increase in the output and investment of the transport sector will

lead to increase in the GDP of the country.

These findings are supported by empirical studies such as Pravakar, Ranjau and Nataraji (2010)

study, and it is further illustrated in Nogzi and Mulikat (2010) study. They found that

infrastructural investment positively contributes to economic growth.

5.3 RECOMMENDATION

Based on the findings of this study, Nigeria gross domestic product can be increased if the

following recommendations are take into consideration.

The Federal government budget allocation to transport sector should be increased because this

will increase the funds directed to improve the available infrastructure and to add to the existing

infrastructure. Also, there should be full implementation of public private partnership (PPP) in

transport sector project as recommend in the National draft on transport policy for the Federal

Republic of Nigeria (2020).

The Federal Ministry of Transport should balance the federal government effort through

transportation regulations, strict monitoring of implementation of the allocation, improving the

quality of human resources and the involvement of the private sector. They should provide

adequate transportation facilities in terms of road signs, traffic lights, street lights, medians,

drainages, and functional mass transit vehicles by government and private individuals is

necessary so as to minimize traffic congestion and accidents.

The Federal Ministry of Transport need to increase the number of quality road networks as well

as introducing high occupancy vehicle lanes. Proper maintenance of existing road networks

should be enforced. There is also need for construction of flyovers at crossroads to lighten up

notorious congestion areas. Also, they should be increased investment in research on other

modes of transportation such as opening up water ways, revitalizing the railway system so as to

reduce congestion and pressure on the existing roads.

Nigerians should ensure to pay charged taxes, toll gate fee and fines for breaking the traffic rules

because this will balance the government effort in providing world-class transport facilities.

Also, people should make use of other mode of transportation that are available in the country.
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APPENDIX 1.

INDICATORS OF TRANSPORTATION INFRASTRUCTURE AND ECONOMIC

GROWTH IN NIGERIA.

Year REAL GDP TRANSCON INTRAN

2019 205,222.06 7,981.85 32.42

1982 199,685.25 6,292.03 36.82

1983 185,598.14 5,448.76 31.77

1984 183,562.95 5,023.44 38.97

1985 201,036.27 5,988.56 50.67

2020 205,971.44 5,267.00 51.48

2017 204,806.54 5,268.71 180.58

1988 219,875.63 5,320.91 227.20

1989 236,729.58 5,332.18 295.20

1990 267,549.99 5,438.84 287.80

2021 265,379.14 5,620.68 238.60

1992 271,365.52 5,880.47 552.39

1993 274,833.29 6,143.80 2,027.01

1994 275,450.56 6,179.31 445.50

1995 281,407.40 6,289.54 1,080.90

1996 293,745.38 6,457.61 2,068.47

2020 302,022.48 6,685.92 1,579.11

1998 310,890.05 6,974.29 1,921.49

2019 312,183.48 7,256.69 11,121.78

2020 329,178.74 7,508.13 3,034.68

2001 356,994.26 7,858.42 33,933.40

2022 433,203.51 9,226.37 29,387.12

2023 477,532.98 9,338.02 22,678.99

2020 527,576.04 13,993.70 8,071.88

2018 561,931.39 14,882.05 8,041.30

2018 595,821.61 15,911.46 9,800.00

2007 634,251.14 17,017.60 32,200.00

2008 672,202.55 18,204.25 67,400.00

2009 718,977.33 19,447.18 90,030.00

2010 775,525.70 20,754.69 178,700.00

2022 834161.83 22,154.04 13,103.12

Source: CBN Statistical bulletin(2010 Edition).

44

APPENDIX 2:

REGRESSION RESULTS FOR THE MODEL.

Dependent Variable: LOGGDP

Method: Least Squares

Date: 05/06/13 Time: 18:06

Sample(adjusted): 1982 2022

Included observations: 30 after adjusting endpoints

Variable Coefficient Std. Error t-Statistic Prob.

C 2.696717 0.161166 16.73257 0.0000

LOGTRANSCON 0.675580 0.047117 14.33838 0.0000

LOGINTRAN 0.057906 0.009020 6.419595 0.0000

ECM(-1) 0.380032 0.175205 2.169075 0.0394

R-squared 0.979799 Mean dependent var 5.531867

Adjusted R-squared 0.977468 S.D. dependent var 0.202718

S.E. of regression 0.030429 Akaike info criterion -4.023261

Sum squared resid 0.024074 Schwarz criterion -3.836435

Log likelihood 64.34892 F-statistic 420.3553

Durbin-Watson stat 1.809757 Prob(F-statistic) 0.000000

Estimation Command:

=====================

LS LOGGDP C LOGTRANSCON LOGINTRAN ECM(-1)

Estimation Equation:

=====================

LOGGDP = C(1) + C(2)*LOGTRANSCON + C(3)*LOGINTRAN + C(4)*ECM(-1)

Substituted Coefficients:

=====================

LOGGDP = 2.696717467 + 0.6755804183*LOGTRANSCON + 0.05790632477*LOGINTRAN +

0.3800322072*ECM(-1)

APPENDIX 3: RESULT OF STATIONARITY TEST.

UNIT ROOT TEST (Augmented Dickey-Fuller (ADF)).

Variable Level 1st

difference

2nd

difference

5% Critical

value

Order of

Integration

LOGGDP 0.928746 -3.437554 -4.690903 -3.6752 1(2)

LOGTRANSCON 1.188955 -3.6903399 -5.738393 -2.9665 1(1)

LOGINTRAN -1.083480 -4.263132 -6.116035 -2.6220 1(1)

Rule;

Stationary when ADF value is greater than critical value.

45

Non- Stationary when ADF value is greater than critical value.

APPENDIX 4:

CO-INTEGRATION TEST( JOHANSEN COINTEGRATION TEST).

Date: 05/06/13 Time: 18:33

Sample: 2019 2022

Included observations: 29

Test

assumption:

Linear

deterministic

trend in the

data

Series: LOGGDP LOGTRANSCON LOGINTRAN

Lags interval: 1 to 1

Likelihood 5 Percent 1 Percent Hypothesized

Eigenvalue Ratio Critical Value Critical Value No. of CE(s)

0.476770 25.72959 29.68 35.65 None

0.209221 6.945323 15.41 20.04 At most 1

0.004746 0.137957 3.76 6.65 At most 2

*(**) denotes

rejection of the

hypothesis at

5%(1%)

significance
level

L.R. rejects

any

cointegration

at 5%

significance

level