An Empirical Investigation of the Institutions’ Hypotheses in Nigeria

Abstract

The study investigates the institutions" hypotheses (grease the wheels versus sand the wheels) in Nigeria by using the Autoregressive Distributed Lag (ARDL) technique. The result indicates that corruption has significant negative effect on GDP as a proxy for economic performance. The result, thus, upholds the existence of "sand the wheels" hypothesis in Nigeria. The various cases of embezzlements of public funds in the country, coupled with the high rate of money laundering outside the country, may not have given room for the existence of "grease the wheels" hypothesis. The study concludes that Nigeria has to develop its institutions for it to tap from the global progression.