ABSTRACT

 This study focused on the effect ofcapitalformation on Nigeria’s economic growth. Specifically, the study examined the impact ofgrossfixed capitalformation (a proxy utilizedfor capital formation), total national savings and inflation rate (an index ofinflationary trend) on gross domestic product. The years under consideration rangedfrom 1981 to 2018. The data on the underlying variables, especially grossfixed capitalformation, total national savings, inflation rate and gross domestic productfrom the CBNStatistical Bulletin, World Development Indicator ofthe World Bank and the annual abstracts ofthe National Bureau ofStatistics. The techniques for data analysis include the error correction techniques. Additionally, the unitroot and cointegration tests were relied uponfor the basic pre-estimation tests Thefindings reveal that there exist co-movement between grossfixed capitalformation, total national savings, inflation rate and real gross domestic product. Put differently, a long run relationship exists between the aforementioned variables. Current real domestic product wasfound to be significantly impacted upon by previous year's level oftotal output as it increases current real GDP by 0.49 per cent the error correction model isfound to be convergence given that the error correction coefficient has a negative sign and meets that statistical requirement as its associatedprobability valuefalls below 0.1)5. The study recommends that There should be a deliberate collaboration between the government and the private sector towards building conducive enabling environment, Government should induce the money and capital market to function adequately in order to enhance investors ' confidence Keywords: Capitalformation, economic growth, Total National savings, Inflation Rate, Gross Fixed Capital Formation.