ISSN 2411-9571 (Print) ISSN 2411-4073 (online) European Journal of Economics and Business Studies January - April 2019 Volume 5, Issue 1 89 The Sources of Economic Growth in Nigeria: A Growth Accounting Approach Emeka Nkoro Ph.D Department of Economics, University of Port Harcourt Aham Kelvin Uko Ph.D.Ministry of Environment, Abia State, Nigeria Abstract The study investigated the sources of growth in Nigeria for the period 1960 to 2017 using the growth accounting framework of the standard neoclassical production function.Specifically, the study focused on evaluating the contribution of capital, labour and total factor productivity to economic growth in Nigeria. Additionally, in order to establish the relationship between capital, labour and total factor productivity, and economic growth, correlation coefficients between the variables were estimated. The results correlation analysis showed that the growths of capital, labour and total factor productivity were positively correlated with economic growth. Furthermore, the results from the growth accounting framework revealed that capital was found to be the major driver of economic growth in Nigeria during the entire period, 1961-2017. In the case of the sub-periods, capital was the major driver of economic growth in Nigeria during the first sub-period, 1961-1980. However, during the period, 1981- 2000, labour was the major driver of economic growth, followed by capital while TFP growth contribution deteriorated as it was negative. Also, TFP was the major driver of economic growth during the period 2001- 2017. Based on the foregoing, the study therefore recommends that, policies that encourage physical capital, human capital and technological development through domestic and foreign investments should be adopted, nurtured, sustained and intensified, noting that capital, human capital and technological development are key to economic growth and development. Keywords:Total Factor Productivity, Relative Factor Shares, Economic Growth, Growth Accounting Framework, Nigeria. Introduction Economic growth rate, no doubt, is the measure of economic performance among countries. Countries with high economic growth rate are seen to be high performers while those with low growth rate are judged to be poor performers. This is why there is a lot of concern about rates of growth by countries and why there is a lot of pre-occupation with the question: why are some countries growing slowly and some growing fast? In order to answer this question, there has been a growing debate on sources of economic growth across countries since the introduction of the growth accounting method which is also known as the Solow model. The debate revolves around how much of total growth in output is attributed to factor inputs (capital and labour) or the accumulation of physical and human capital and to total productive(technical progress) (Solow, 1957). Hence, growth accounting method or sources of economic growth approach attempts to break down total output growth into its components parts- capital, labour and technical progress. The Solow model attributes sustained long-term growth to technical progress due to the principle of diminishing marginal productivity. The technical progress or technical change, often called Solow’s residual or total factor productivity (TFP) encompasses all sources of economic growth apart from those attributable to capital and labor. According to Aghion and Howitt (1992) and Romer (1990), technological progress is determined by internal forces in the economic system. They explained that technological progress depends on innovation and the incentive, while innovation depends on policies favoring competition, intellectual property rights and trade openness. Often, the final step in the growth accounting study is to relate factor growth rates, relative factor shares and TFP to such elements as government policies (such as economic reforms), openness, natural resources, and initial levels of physical and human capital. Empirically, it is observed that the growth accounting analysis allows a determination of whether growth is extensive or intensive. That is, whether economic growth is propelled by factor input growth or driven largely by productivity increases. This enables the policy makers to know whether the observed growth is sustainable or not. If growth is influenced by rapid increases in capital stock, such