STRUCTURAL CHANGE AND GROWTH DYNAMICS IN NIGERIA: EVIDENCE FROM BREAK-ADJUSTED COINTEGRATION ANALYSIS

This study investigates the stationarity properties of key economic variables in Nigeria—Exchange Rate (EXR), Foreign Direct Investment (FDI), Gross Domestic Product (GDP), Inflation Rate (INF), and Interest Rates (INTR) using rigorous statistical methodologies. The Augmented Dickey-Fuller (ADF), Phillips-Perron (PP), and Kwiatkowski-Phillips-Schmidt-Shin (KPSS) tests are the three unit root tests that we use. With p-values above 0.05, the results show that all variables are non-stationary at levels; however, following initial differencing, stationarity is attained, as shown by noticeably reduced p-values. Trend stationarity in the initial differences is further validated using the KPSS test. Significant breaks for all variables are also revealed by the findings of structural break analysis using the Zivot-Andrews and Lee-Strazicich tests, particularly in 2008 (the year of the global financial crisis), 2012 (the withdrawal of fuel subsidies), and 2014 (the decrease in oil prices). According to Gregory-Hansen cointegration results, there are no long-term correlations between the economic variables of concern, and structural discontinuities due to factors like insecurity and oil dependency happened in 2011 and 2019. These results highlight how important it is to take into consideration both stationarity and structural changes in economic assessments, offering crucial guidance to investors and policymakers as they negotiate the intricacies of Nigeria's economic landscape.