Technology and Inclusive Growth: Addressing Poverty, Inequality and Income Distribution in Nigeria

Abstract

Technology has become an increasingly important driver of economic transformation and development, with significant implications for poverty reduction, inequality, and income distribution in Nigeria. This study examines the relationship between technological advancement and inclusive growth in Nigeria using data sourced from the CBN statistical bulletin and the World Development Indicators (WDI) from 1995 to 2024. The dependent variable is poverty rate (POV), while the inclusive growth index (IGI), mobile phone subscription (MOBSUB), internet penetration (INTPEN), ICT index (ICTINDEX), education (EDU), foreign direct investment (FDI), GDP growth rate (GDPg), inflation rate (INFL) and government expenditure (GOVEXP) were the independent and control variables, respectively.   A composite inclusive growth rate index (IGI) for Nigeria was developed using ten indicators applying principal component analysis from E-view 9 to derive a single value for each year and was used to regress with other listed variables of technology. The test mechanisms adopted for the study were the unit root test, co-integration and VAR technique. The findings reveal that the ICT index, government expenditure, GDP growth rate, inclusive growth index, and inflation rate have positive influential shocks or responses on poverty, inequality, and income distribution in Nigeria, suggesting that Nigeria's challenge is not simply to generate economic and technological growth but to ensure that such growth is inclusive, pro-poor, employment-generating, and capable of improving income distribution, which is particularly important for achieving sustained reductions in poverty and inequality. However, mobile phone subscription, internet penetration, education, and foreign direct investment showed negative and insignificant relationships or shocks on poverty, inequality, and income distribution, implying that the study would provide strong empirical support for the argument that technology and economic growth reduce poverty most effectively when they are accompanied by human-capital development and equitable access to economic opportunities. For policy, the study recommended that the government should formulate inclusive growth policies that require simultaneous investment in digital infrastructure, affordable mobile and broadband access, quality education and digital skills, and broad-based economic growth. These interventions should particularly target rural communities, low-income households, women, young people, and informal-sector workers.