Spatial econometric analysis of regional economic disparities in Nigeria: Mapping the determinants of poverty and wealth

Abstract

This study investigated the extreme regional differences in poverty and wealth in Nigeria using a spatial econometric model to identify the spatial dependencies and determinants. The data for the study were secondary, and the units of analysis and observations covered the 36 states of the Nigerian federation, including the Federal Capital Territory (FCT). The empirical results from the study provided evidence that there are major disparities between the socio-economic indicators, including income, education, and unemployment rates, in the geopolitical regions of Nigeria, with the northern states having disproportionately larger poverty. Specifically, the results showed that while education and income levels significantly reduce poverty in Nigeria, high unemployment rates and the Multidimensional Poverty Index (MPI), on the other hand, exacerbate it. Furthermore, the spatial autocorrelation was significant, indicating that poverty in a particular region affects the neighboring regions and that individual policy actions towards reducing poverty are inadequate. Consequently, the study suggested greater synergy among regions in Nigeria, whereby regional policies rather than fragmented individual policies must be adopted to counter the effects of poverty. Investments in education and employment opportunities should be spread and balanced across regions to be successful.