Public-Sector Project Abandonment Decision: A Test of the Ricardian Equivalence Theory on the Failed Lagos Metroline in Nigeria
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Information Science Reference (an imprint of IGI Global)
Abstract
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This chapter examines the implications of projects abandonment with test of the Ricardian Equivalence
on the failed Lagos metro line project in Nigeria as case study. The main variables used are Rail and
Pipeline Output, Budget Deficit, Interest Rate, Corruption Index, Savings and some others. The study
results on the Ricardian Equivalence hypothesis on deficit financing of projects using Vector autoregression
model from 1980-2012 indicate that no causal influence holds in Nigeria. Results show that
poor planning, corruption, political factors, poor support infrastructures, poor quality of local resources,
etc. were attributable. The results of the Impulse Response tests reveal that Rail and Pipeline output and
a few others responded positively to shocks in the short run (years 1-2), and negatively to others. The
result affirms that Government should privatize the railway system, legislate against project abandonment
and ensure that projects are adequately planned, funded, insured and insulated against corruption
Keywords
H Social Sciences (General), HF Commerce