Analysis reveals effects of informal economy on GDP per capita in Nigeria, suggesting reforms for balanced growth.
Key Points
A one percent increase in the informal economy leads to a 0.38 percent rise in long-run formal GDP per capita, but a 0.03 percent decrease in the short run.
The ARDL model analysis indicates a significant long-term impact of informality on formal economic growth, promoting job creation and increased demand.
Short-term informal activities negatively affect formal economy through competition issues and limited financing access.
Policy recommendations call for a dual-horizon strategy to balance short-term challenges and long-term growth opportunities.