ANALYSING THE FACTORS CONTRIBUTING TO THE ECONOMIC GROWTH OF NIGERIA WITH FACTOR ANALYSIS TECHNIQUE

A. D. Pwasong, G. D. Bwirdimma, A. H. Ujah, A. T. Mammuan

Abstract


Multivariate Factor Analysis technique plays an important role in many economic fields. In this study, multivariate factor analysis is employed to analyze the factors contributing to the economic development of Nigeria based on economic activities by employment. The data used in this study is from the National Bureau of Statistics (NBS). In performing the multivariate statistical factor analysis method, the Statistical Package for the Social Sciences (SPSS) software is employed for the analysis. The variables (i.e. the economic activities) are fourteen in number such that the number of extracted factors is equal to the number of the observed variables and the only factor that was retained is the first factor since it is the only one with eigen value greater than one (1), i.e. 12.615 representing about 90.108% of the total variance that can be explained. The extraction method employed here is the principal component analysis (PCA) method and the rotation method is varimax with Kaiser Normalization. The results revealed that twelve out of the fourteen economic activities considered in this study has a strong positive relationship to the retained factor except for manufacturing industries as well as production and distribution of electricity and water. This trend by implication means that Nigerians are not really satisfied with what is going on in the manufacturing industries as well as what is going on in the production and distribution of electricity as well as the water sector in terms of job creation and quality of services being rendered. Also, a multiple linear regression model was fitted to the data and the ANOVA result generated from the model indicate that total employment by economic activities with respect to GDP has significant effect on the growth of the economy.

Keywords: Factor Analysis, Communality, Econometrics, Regression, Varimax Rotation, Economic Activities


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