Economic Freedom, Corruption and Economic Growth in Nigeria

Abstract

Abstract Research purpose. This study examines the relationship between economic freedom, corruption, and economic growth in Nigeria from 1995 to 2023. It contributes to the existing literature by investigating the interactive effects of economic freedom and corruption on Nigeria’s economic growth. Design/Methodology/Approach. Using autoregressive distributed lags and the Granger causality test, the study analyses both short-and long-run relationships and determines the direction of causality among the variables. Findings. Results indicate that economic freedom supports sustainable growth primarily in a low-corruption environment. In the short term, economic freedom enhances growth despite the presence of corruption. However, the estimates show that corruption undermines economic freedom to deter long-run growth. The Granger causality test validates the potential influence of economic freedom on growth. These findings highlight the importance of reducing corruption alongside promoting economic freedom for sustainable growth. Originality/Value/Practical implications. Although there are few studies on the direct impact of economic freedom on growth in Nigeria, this literature has ignored the critical role of corruption in the relationship. This study is different in that it investigates the moderating role of corruption in Nigeria’s economic freedom-growth nexus.