Institutional Quality and Economic Performance in Nigeria (1999–2025): Evidence from the ARDL Approach

Abstract

This study examined the relationship between institutional quality and economic performance in Nigeria over the period 1999–2025, by employing the Autoregressive Distributed Lag (ARDL) bounds testing approach. Institutional quality is measured using six Worldwide Governance indicators (WGIs), namely: voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption. Economic Performance was proxied by GDP per capita growth. Annual time-series data were obtained from the World Development Indicators (WDI) and the Worldwide Governance Indicators. The ARDL bounds test confirms the existence of a long-run cointegrating relationship among the variables. The findings indicate that, in the long run, control of corruption and government effectiveness have positive and statistically significant estimated association with real GDP per capita, whereas the political-stability indicator has a negative estimated coefficient. In the short run, regulatory quality and voice and accountability have positive estimated coefficients. The study concludes that weaknesses in institutional frameworks, particularly corruption and political instability, have constrained Nigeria’s growth potential despite the restoration of democratic governance since 1999. Accordingly, the study recommends strengthening anti-corruption institutions, enhancing judicial independence, and improving the quality and effectiveness of public bureaucracy.