Beyond Macroeconomic Stability: Economic Growth(GDP), Institutional Quality and Domestic Private Investment Dynamics in Nigeria, 1980 to 2024

Domestic private investment is important to capital formation in Nigeria, yet the relative importance of growth, institutional quality and conventional macroeconomic variables remains insufficiently established within a single empirical framework. This study examines domestic private investment in Nigeria from 1980 to 2024 using annual time series data and an autoregressive distributed lag framework. The Augmented Dickey-Fuller results indicate a mixed order of integration, with inflation and interest rates stationary at level and the remaining variables becoming stationary after first differencing. The ARDL bounds test reports an F statistic of 5.943, exceeding the reported 1 percent upper bound of 4.26 and indicating a levels relationship among the variables. The dynamic level estimates show that lagged investment is positive and significant at 0.516, while economic growth is positive and significant at 0.671 and institutional quality is positive and significant at 0.122. Inflation, interest rate, exchange rate, government expenditure and external shocks are not statistically significant in the same equation. In the short run, economic growth remains positive and significant at 1.098, while the error correction coefficient of minus 0.773 indicates substantial annual adjustment towards equilibrium. Pairwise Granger testing shows predictive precedence from economic growth to investment, with a probability value of 0.0020. The evidence therefore identifies economic growth as the most persistent observed correlate of domestic private investment, while institutional quality appears more relevant to the persistent investment relationship than to immediate annual changes. The findings shift the Nigerian investment debate from macroeconomic stability considered in isolation towards the combined importance of productive expansion and institutional credibility.