THE ASYMMETRIC EFFECT OF CAPITAL ON PRODUCTIVITY IN NIGERIA BASED ON COBB-DOUGLAS PRODUCTION FUNCTION

Abstract

This paper examined the asymmetric (non-linear) effect of capital on productivity in Nigeria using Non-Linear Autoregressive Distributed Lag Model over the years 1991 to 2022. The findings confirmed the existence of long run and non-linear relationship on the concerned variables. Furthermore, the results revealed that both the positive and negative effect of capital, in the short run, are not significant in influencing the productivity in Nigeria, but labor has a significant and a direct effect on productivity in the country. Also, long run is reached in less than two short run periods as more than eighty percent is corrected from short run toward long run equilibrium. When the long-run is reached, the positive shocks of capital has no significant-influence on productivity but the negative shock of capital has a positive influence on productivity in Nigeria. Similarly, labor has a direct linear effect on productivity of the country. Hence, the policymakers and entrepreneurs are advised to utilize labor intensive methods of production, for the purpose of improving their productivity in Nigeria.