INCOME INEQUALITY AND ECONOMIC GROWTH IN NIGERIA

This study investigated the relationship between income inequality and economic growth in Nigeria, addressing a critical concern as nearly 83 million people lived below the poverty line. The 2022 Gini coefficient of 35.1 highlighted substantial wealth inequality, yet there was a scarcity of research directly linking income inequality to economic growth in the Nigerian context. The study aimed to fill this gap by examining how these variables interacted and the potential exacerbating or mitigating effects of globalization on income inequality. Specific objectives included analyzing the correlation between income inequality, as measured by the Gini Index, and economic growth, and exploring the impact of globalization on income inequality. Theoretical frameworks employed included Marxist Theory, Neoclassical Theory, Social Justice Theory, Classical Economic Growth Theory, Endogenous Growth Theory, and the Solow-Swan Growth Model. Using the ARDL short-run model to test two hypotheses, the study found a positive relationship between income inequality and economic growth, suggesting that higher inequality could stimulate future growth due to increased investments from wealthier segments. Additionally, the effects of globalization, particularly foreign direct investment (FDI), were shown to initially increase income inequality, but with a lagged reduction in inequality as the benefits of globalization became more evenly distributed. The study concluded that while income inequality positively influenced economic growth in Nigeria, it was essential to address the uneven distribution of that growth. Recommendations for the Federal Government included implementing targeted economic policies to reduce inequality and promoting inclusive investment strategies to maximize the benefits of globalization.