Does Economic Growth, External Debt, and Institutional Quality Promote Poverty and Income Inequality in Nigeria?

Abstract This study assessed the effect of economic growth on poverty and inequality in Nigeria between 1990 and 2022. The research applied the ARDL technique in its empirical analysis. Findings from the study indicated that economic growth does not have significant long-run impact on poverty and inequality. However, the short-run relationship showed that economic growth increases inequality in Nigeria. External debt was revealed to further aggravate poverty and inequality in the long-run. Also, while government effectiveness demonstrated an enhancing effect on poverty in the short and long-run periods, its long-run impact on inequality is significantly decelerating. Thus, based on the aforesaid conclusions the study recommends the strengthening of small and medium enterprises through access to finance at lower interest rates and equitable distribution of national wealth through the payment of a living wage, provision of social and economic infrastructure, etc. Also, the agricultural sector should be made more attractive to the youths through encouraging export promotion policies. Leveraging financial technology, and encouraging start-up firms can further reduce the poverty and the inequality level in the country.