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CAPITAL ACCUMULATION AND ECONOMIC GROWTH: THE ROLE OF THE NIGERIAN STOCK EXCHANGE
Abstract:
The general rate of economic growth is limited by the shortage of capital which has been identified as the core factor by which all other aspects of growth are made possible. Therefore, development efforts are geared towards finding a way of breaking the vicious circle between capital shortage and underdevelopment by designing a mechanism for achieving an optimum rate of capital accumulation. The rate of capital accumulation is determined by the level of investment, which necessitates domestic savings and/ or foreign assistance. However, foreign assistance has its implicit burden, especially for the less developed countries (LDCs). As such, domestic savings has become the most reliable source of investment finance, while foreign assistance acts as a supplement. The mobilisation of large investible funds required for increased rate of capital accumulation thus becomes an imperative. It is on the above-mentioned premise that this study of the Nigerian Stock Exchange is being Undertaken, albeit as a single financial institution where large sums of investible funds can be raised. Informed by the need to ascertain its real significance, and its contribution to capital accumulation and the growth process, especially through the new issues of its primary market (this signifies new saving creation in the market), simple but testable macro-economic models are used to empirically test the significance of new issues to economic growth vis-a-vis the relative significance of other determinats of investment or gross capital accumulation viz: domestic institutionalised savings and foreign capital inflow. The Nigerian Stock Exchange* was found to be significant, with potentials of further contributing to gross capital accumulation and growth. As such, ways in which to further the contributiion of the Nigerian Stock Exchange are suggested. These suggestions centers around increasing government participation in providing a conducive atmosphere for the development of indigenous enterprises. This is identified as a necessary step to increase the supply of indigenous corporate new issues thereby neutralising the current foreign-owned/dominated corporations quoted on the exchange.
CAPITAL ACCUMULATION AND ECONOMIC GROWTH: THE ROLE OF THE NIGERIAN STOCK EXCHANGE
