An assessment of the impact of digital technology adoption on economic growth and labour productivity in Nigeria

This study investigates the impact of digital technology adoption on economic growth and labour productivity in Nigeria for the period of 1990-2019. Based on an Augmented Solow Model of a hypothesised positive relationship between digital technology adoption and economic growth, we employ a Structural Vector Autoregressive (SVAR) framework and extract from it the Impulse Response Function (IRF) that measures the response of economic growth and labour productivity to a shock in digital technology adoption. We also examine the Forecast Error Variance Decomposition (FEVD), that shows the proportion of movement in economic growth and labour productivity that can be attributed to innovations in digital technology. Furthermore, a VAR Granger Causality test was conducted to ascertain the direction of causality between the variables. Overall, we find that the impact of shocks to digital technology adoption on economic growth and labour productivity is negative and significant in the short-term (within the first four quarters). However, in the medium term and above (from the fifth quarter and above), the impact of digital technology shocks becomes positive. Again, we find from the VAR Granger Causality test, that the direction of causality runs uni-directionally from digital technology to economic growth, and labour productivity. The study recommends that amongst others, industry players and government must train and re-train their workforce to quickly adapt to emerging technologies which will help reduce the time lag in reaping the full benefit of such technology. Again, there should be policies to improve the regulatory oversight of the digital technology sector in the country, to correct any market failures, while also ensuring that the proportion of Nigerians with access to digital technology tools and services keeps expanding.