Title: Graphic5
Author: USER
Document comments: DocumentCreationInfo

Izu, S. Iroro, PhD, Ogedengbe, A. Frank, PhD, Garba, Dimas, Ph.D

Effect of Growth in Gross Domestic Product on Economic Development: A Comparative Study of Nigeria and Germany

Effect of Growth in Gross Domestic Product on Economic Development: A Comparative Study of Nigeria and Germany

By

Izu, S. Iroro, PhD
Department of Political Science and International Relations, Nile University of Nigeria (NUN), Abuja, Nigeria Mobile: 08166136354
Email: Iroro.Izu@nileuniversity.edu.ng

Ogedengbe, A. Frank, PhD
Department of Business Administration, Nile University of Nigeria (NUN), Abuja, Nigeria.
Mobile: 08181142225
Email: frank.ogedengbe@nileuniversity.edu.ng

Garba, Dimas, Ph.D
Department of Political Science and International Relations, Nile University of Nigeria (NUN), Abuja, Nigeria Email: .garba@nileuniversity.edu.ng

Abstract
This paper investigates the relationship between economic growth, measured by gross domestic product (GDP), and economic development, measured primarily by the Human Development Index (HDI), through a comparative analysis of Nigeria and Germany between 1990 and 2023. Guided by modernisation and dependency theories, the study adopts a mixed-methods design that combines descriptive statistics, trend analysis, and institutional interpretation. The findings reveal that Nigeria experienced periods of rapid GDP expansion, particularly during the oil boom years. However, these gains were weakly translated into improvements in human development due to structural dependence, policy volatility, and institutional weaknesses. By contrast, Germany's more modest but stable GDP growth was consistently accompanied by broad-based development outcomes, supported by strong institutions, diversified production, and robust welfare systems. The comparative evidence suggests that the growth–development nexus is context-dependent: while GDP growth can be a driver of development, its effectiveness hinges on structural conditions and institutional capacity.

Keywords:   Economic  Growth,  Development,  Economic  Development,  Gross  Domestic
Product (GDP), Human Development Index (HDI)

Introduction
The relationship between economic growth and economic development remains a central concern in development economics. Economic growth, often measured by increases in Gross Domestic Product (GDP), reflects the expansion of national output. In contrast, economic development encompasses multidimensional improvements in living standards, including poverty reduction, educational attainment, healthcare, and institutional quality (Todaro & Smith, 2020). The assumption that growth automatically translates into development has increasingly been questioned, as many economies have experienced rising GDP without

commensurate improvements in citizens' welfare outcomes (Sen, 1999; Easterly, 2001). This paper explores this paradox through a comparative analysis of Nigeria and Germany, two economies that present starkly contrasting experiences in the growth–development nexus.

Nigeria, Africa's largest economy, has experienced periods of robust GDP growth, particularly during oil booms and the recent expansion of the services sector. Nevertheless, persistent challenges such as widespread multidimensional poverty, inequality, inadequate infrastructure, and weak institutions suggest that growth has not yielded inclusive development (IMF, 2023; World Bank, 2023). Germany, on the other hand, represents a developed economy where consistent growth has been accompanied by structural transformation, strong institutional frameworks, and sustained improvements in social welfare outcomes (OECD, 2022). Examining these divergent cases offers valuable insights into the extent to which GDP growth fosters genuine development.

The analysis is situated within two key theoretical perspectives. Modernisation theory emphasises the transformative role of growth in advancing industrialisation, social progress, and institutional evolution (Rostow, 1960). In contrast, dependency theory highlights the structural constraints and vulnerabilities of resource-dependent economies, which often limit the developmental impact of growth (Prebisch, 1950). By engaging these lenses, the paper interrogates whether GDP growth alone is sufficient to drive development, or whether deeper institutional and structural factors determine outcomes.

The objectives of this study are threefold: first, to examine historical trends in GDP growth and selected development indicators in Nigeria and Germany; second, to evaluate the relationship between GDP growth and development outcomes such as poverty reduction, inequality, human capital, and life expectancy; and third, to identify institutional and structural factors that explain the divergence in outcomes between the two economies.

The paper's contribution lies in extending the comparative literature on the growth–development relationship. By juxtaposing a resource-dependent developing country with a highly industrialised developed economy, the study highlights the contextual conditions under which growth contributes to (or fails to contribute to) development. In doing so, it challenges linear assumptions about the growth–development nexus and provides policy-relevant lessons for Nigeria and similar economies seeking to transform growth into broad-based development.

Conceptual Clarifications and Theoretical Framework
Gross Domestic Product
Gross Domestic Product (GDP) growth refers to the quantitative increase in the monetary value of goods and services produced within a country over a given period, typically measured annually in real terms to control for inflation (Todaro & Smith, 2020). As a macroeconomic indicator, GDP growth has long been regarded as the primary benchmark of national economic performance. Policymakers often interpret a surge in GDP growth as evidence of expanding productive capacity, increased employment opportunities, and rising aggregate income. In classical economic thought, Peled & Silber (2019) argue that growth was assumed to be both a necessary and sufficient condition for societal progress, based on the belief that the “trickle- down” of national income would raise overall welfare. However, subsequent debates have highlighted the limitations of this narrow focus. GDP growth measures only market-based

output and ignores non-market activities such as unpaid household labour and environmental costs (Stiglitz, Sen, & Fitoussi, 2009). Moreover, it does not capture income distribution, the sustainability of growth, or improvements in social dimensions such as education, health, and political freedoms. Still, GDP remains a plausible yardstick for measuring a country's broad economic output.

Economic Development
Economic development, by contrast, denotes a broader and more qualitative process of transformation that extends beyond income growth. It encompasses improvements in living standards, poverty reduction, expansion of human capabilities, structural diversification of the economy, technological advancement, and institutional strengthening (Sen, 1999). Development is not only about the accumulation of wealth but also about strengthening people's agency (their ability to make choices) and expanding freedoms and opportunities, such as access to education and healthcare, and participation in social and political life. To capture this multidimensionality, the United Nations Development Programme (UNDP) introduced the Human Development Index (HDI), which combines indicators of health (life expectancy), education (years of schooling), and income (gross national income per capita). Other measures, such as the Multidimensional Poverty Index (MPI), gender inequality indices, and measures of environmental sustainability, have further broadened the scope of how development is understood and assessed (UNDP, 2020).

The conceptual distinction between GDP growth and economic development is especially critical in comparative studies. Countries can experience rapid growth without parallel gains in development, particularly when growth is resource-dependent, volatile, or accompanied by inequality and weak institutions. Hence, while GDP growth can serve as a driver of development, the relationship is neither automatic nor uniform across contexts, necessitating an examination of how structural conditions, institutions, and policies mediate the growth–development nexus.

Theoretical Framework
This study is anchored on two classical but contrasting theories of development: Modernisation Theory and Dependency Theory. Modernisation Theory, articulated most prominently by Rostow (1960) and further developed by scholars such as A.F.K. Organski and David Apter, posits that economic growth initiates a linear process of societal transformation. In this model, countries advance through successive stages of development, beginning with traditional or subsistence economies and progressing to an advanced stage of “high mass consumption.” Growth, therefore, is not merely an economic phenomenon but a catalyst for political, social, and institutional change. As Izu (2021) notes, modernisation essentially entails the integration of liberal-democratic qualities into national systems, including institutional expansion, the rationalisation of the state apparatus, the concentration of power, increased political participation, and the augmentation of state capacity to meet citizens' demands.

In Rostow's framework, the “take-off” stage marks the point where sustained GDP growth begins, supported by enabling governance and structural reforms. This economic momentum fosters industrialisation, urbanisation, improved education, and technological innovation, culminating in rising living standards and broader social modernisation. Applied to this study, modernisation theory would predict that both Nigeria and Germany, having experienced periods

of sustained growth, should register parallel progressive improvements in human development outcomes. Where divergences (or stagnation) appear, they are interpreted as consequences of historical and structural conditions that delay or accelerate a country's progression through Rostow's stages.

Dependency Theory emerged as a direct counter to the optimism of modernisation theory, drawing initially on the work of Raúl Prebisch (1950) and later expanded by scholars such as André Gunder Frank, Theotonio Dos Santos, and Claude Ake. At its core, the theory locates the origins of contemporary underdevelopment in the historical legacy of colonialism and the structural inequalities of the global economic system. It challenges the modernisation view of linear, stage-based progression by arguing that such models ignore the colonial experiences and exploitative linkages that continue to shape the trajectories of countries in the Global South.

According to dependency theorists, structural constraints (including unequal trade relations, commodity dependence, and peripheral status within the international system) severely restrict the developmental benefits of economic growth for dependent economies. Growth, when it occurs in these contexts, is often concentrated in narrow enclaves (such as extractive industries) and fails to stimulate broad-based welfare improvements or structural diversification. This dynamic is a classical representation of Frank's (1966) notion of the “development of underdevelopment,” in which apparent progress reinforces dependency and perpetuates a cycle of structural stagnation.

Within the global core–periphery hierarchy, Nigeria occupies a peripheral position characterised by dependence on oil exports and vulnerability to external shocks. At the same time, Germany represents a core economy with a diversified production base and significant influence in international trade and finance. From this perspective, GDP growth in Nigeria is structurally constrained in its developmental impact, whereas Germany's growth is more readily converted into sustained social and economic transformation.

Together, these theories provide complementary lenses for the comparative analysis. Modernisation  theory  emphasises  the  potential  of  GDP growth  as  a  catalyst  for  social transformation, while dependency theory highlights the structural and external factors that constrain such transformation in developing economies. By juxtaposing Nigeria and Germany, this paper tests the extent to which growth leads to development under differing structural conditions, thus contributing to the longstanding debate on the growth–development nexus.

Literature Review
The relationship between GDP growth and economic development remains one of the most contested issues in development economics. Modernisation and dependency theories provide the two dominant (though opposing) frameworks for understanding this relationship.

Modernisation theorists, such as Rostow (1960), argue that sustained GDP growth sets countries on a linear path of structural transformation, from traditional to modern societies. In this view, rising output leads to industrialisation, urbanisation, expanded education, and improved health services, thereby fostering overall welfare. Empirical studies grounded in this tradition have often shown that higher growth rates are associated with significant improvements in human development indicators in advanced industrial economies. For example, OECD (2022) reports

highlight that growth in Germany and other advanced countries has historically been accompanied by improved social services, stronger welfare systems, and rising standards of living, consistent with predictions of modernisation. In the same vein, Shashoua& Basu (2015) noted that long-term sustained growth increases permanent income, allowing individuals to invest in human capital and welfare, while at the macro level, GDP growth generates fiscal revenues that make social and environmental investments more viable.

Dependency theory offers a critical counterpoint. Pioneered by Prebisch (1950), this view holds that growth in resource-dependent or peripheral economies is often externally constrained and unevenly distributed. Peripheral economies may experience rising GDP without corresponding improvements in welfare, due to unequal terms of trade, commodity specialisation, and limited domestic diversification. Williamson (2008), in a study spanning 1782 – 1913, concludes that while terms-of-trade improvements raised long-run growth in rich core countries, they failed to do so in the poor periphery between 1870 and 1939, contributing to the Great Divergence. Evidence from Nigeria exemplifies this argument. Studies have documented periods of robust growth, especially during oil booms, that did not yield commensurate reductions in poverty or gains in human capital (World Bank, 2023; IMF, 2023). Instead, growth was concentrated in the oil sector, with limited spillovers to the wider economy, leaving large segments of the population excluded from welfare gains. This pattern reflects persistent poverty amid high growth rates, creating what Dauda (2019) identifies as a fundamental paradox in Nigeria's development trajectory.

Cross-country research tends to confirm elements of both perspectives. On the one hand, aggregate analyses show a positive correlation between GDP per capita and the Human Development Index (HDI), suggesting that higher incomes create conditions for better education, health, and welfare outcomes (UNDP, 2017). On the other hand, the strength of this correlation varies considerably depending on structural context, institutional arrangements, and distributional mechanisms. This heterogeneity reinforces the relevance of dependency critiques for resource-dependent economies like Nigeria, while supporting modernisation expectations for diversified economies such as Germany.

Despite these insights, the literature reveals a gap. Most studies either focus on single-country analyses (e.g., Nigeria's oil-driven growth) or large cross-national comparisons that mask structural contrasts between specific economies. Few studies explicitly compare a resource- dependent developing economy with a highly diversified industrial economy to examine how growth translates into development under different structural conditions. This paper addresses that gap by juxtaposing Nigeria and Germany, applying modernisation and dependency theories to assess whether and how GDP growth translates into economic development across divergent contexts.

Methodology
This study adopts a comparative research design to examine the relationship between economic growth and economic development in Nigeria and Germany. A mixed-methods approach is employed, combining quantitative analysis of secondary data with qualitative interpretation of institutional and policy contexts. This design allows the study to assess not only whether GDP growth correlates with development indicators but also why outcomes differ across structural and institutional settings.

The analysis relies on secondary data from both domestic and authoritative international databases and reports. Data on GDP growth are drawn from the World Bank's World Development Indicators (WDI), the International Monetary Fund (IMF), and the Organisation for Economic Co-operation and Development (OECD). Economic development is measured using the Human Development Index (HDI), which integrates income, education, and health outcomes into a single composite indicator. Supplementary qualitative information on governance, policy frameworks, and structural conditions is obtained from IMF country reports, World Bank assessments, and peer-reviewed academic studies. The analysis covers the period
1990–2023, providing a long-term perspective across different growth and policy episodes.

The independent variable is GDP growth, measured as the annual percentage change in real GDP. The dependent variable is economic development, operationalised primarily through the HDI and complemented by poverty indicators.

The analysis proceeds in three stages aligned with the study's objectives. First, descriptive statistics and graphical trend analyses are used to compare the trajectories of GDP growth and development outcomes in Nigeria and Germany. Second, correlation analysis is used to assess the statistical association between GDP growth and development indicators. Third, qualitative institutional and policy analysis is undertaken to interpret divergences, drawing on modernisation and dependency theory to explain why growth translates differently into development across the two cases.

Nigeria and Germany are purposively selected for their contrasting positions within the global economic system. Nigeria is a developing, resource-dependent economy that has experienced episodes of volatile growth but persistent development challenges. Germany, by contrast, is an advanced, industrialised economy characterised by stable growth, diversified production, and robust social welfare systems. This contrast makes the two countries suitable for testing the explanatory power of modernisation and dependency theories in interpreting the growth–development nexus.

Comparative Trends in GDP Growth and Development Indicators
This section lays the foundation for our comparative study by taking a deeper dive into the trends of GDP growth and development indicators for Nigeria and Germany between 1990 and 2023. GDP, as a primary measure of economic performance, provides insight into the pace and stability of each country's growth trajectory. At the same time, development indicators such as the Human Development Index (HDI) shed light on how growth translates into improvements in welfare and quality of life. Examining these trajectories side by side enables us to uncover not only the quantitative differences in performance but also the qualitative contrasts in how economic gains are distributed and sustained.

GDP Growth: Nigeria and Germany (1990–2023)
Gross  Domestic  Product  (GDP)  growth  is  the  most  widely  used  indicator  of  economic
performance and serves as a baseline for assessing whether output expansion is associated with
broader development. In line with the first objective of this paper, Figure 1 presents the annual
GDP growth rates of Nigeria and Germany over the period 1990–2023. The figure illustrates not
only the direction of economic growth in both countries but also the magnitude of annual
fluctuations and their susceptibility to global and domestic shocks. By juxtaposing a resource-

dependent developing economy with an advanced industrialised state, the chart provides an empirical foundation for assessing whether GDP growth has consistently supported broader developmental progress across distinct structural contexts. While the main discussion here focuses on consolidated trends and decade averages, the full year-on-year GDP growth rates for both countries are provided in Appendix Table A1 for reference.

Figure 1: Annual GDP Growth Rates in
Nigeria and Germany (1990–2023)

Source: World Bank World Development Indicators (WDI)

Nigeria's growth trajectory is marked by high volatility, with episodes of rapid expansion interspersed with sharp contractions. The mid-2000s oil boom, for example, generated double- digit growth, exceeding 15 per cent in 2004, yet subsequent downturns in 1994, 2016, and 2020 highlight the fragility of such growth when tied to global commodity cycles (World Bank, 2023). By contrast, Germany exhibits a steadier pattern, characterised by moderate growth rates averaging below 3 per cent, with notable contractions during the 2009 global financial crisis and the 2020 pandemic recession (OECD, 2022). The comparative trend underscores two distinct structural realities: volatility in resource-dependent economies versus stability in diversified, innovation-driven economies.

The contrasting patterns can be interpreted through the study's dual theoretical lenses. From the modernisation perspective, Germany's relatively stable trajectory reflects the theory's assumption that sustained GDP growth fosters structural transformation and development (Rostow, 1960). Nigeria's pattern, however, aligns more closely with dependency theory, which emphasises that peripheral economies reliant on primary commodities experience externally induced volatility and limited domestic transformation (Prebisch, 1950; Dauda, 2019). In this sense, the figure provides early evidence that the growth–development nexus is highly contingent on structural conditions, thereby justifying a closer look at long-run averages and development indicators.

While year-on-year fluctuations highlight volatility versus stability, decade averages (Table 1b) offer a clearer view of annual GDP growth for Nigeria and Germany, providing a more consolidated perspective on long-term performance beyond short-term fluctuations.

Table 1b. Decade Averages of GDP Growth
(%) for Nigeria and Germany

Decade/Period | Nigeria | Germany

1990–1999
Average

2.31

2.26

2000–2009
Average

7.68

0.79

2010–2019
Average

3.65

1.97

2020–2023
Average

1.99

0.09

Source: Computed from Table 1A.

Nigeria's performance is marked by a sharp surge in the 2000s, averaging 7.68%, largely driven by the oil boom, debt-relief gains, and temporary macroeconomic reforms. This trajectory aligns with modernisation theory's expectations, which suggest that rapid growth creates momentum for transformation. However, the inability to sustain such growth in the subsequent decade (falling to 3.65% in the 2010s and further to 1.99% after 2020) underscores the dependency critique, pointing to structural vulnerabilities tied to commodity dependence, external shocks, and weak institutional capacity.

By contrast, Germany exhibits modest but stable growth over the period, with averages ranging from 0.79% to 2.26%. The sharp decline in the 2000s reflects reunification adjustment costs and the global financial crisis. However, its recovery to near 2% in the 2010s demonstrates resilience rooted in industrial diversification, strong institutions, and welfare-state buffers. This trajectory aligns closely with modernisation theory's emphasis on cumulative, innovation-led development, showing how even modest growth can translate into sustained welfare improvements.

Taken together, the decade averages highlight the core contrast between volatility and stability: Nigeria's pattern suggests growth spurts that fail to consolidate into structural transformation, while Germany's slower but steady path reinforces the institutional foundations of development.

Human Development Trends in Nigeria and Germany (1990–2023)
While GDP growth provides insights into the quantitative expansion of national economies, it does not, on its own, capture the broader dimensions of human welfare. To address this limitation, the United Nations Development Programme (UNDP) introduced the Human Development Index (HDI) in 1990 (and revised in 2020) as a composite measure that combines health (life expectancy), education (mean and expected years of schooling), and income (gross national income per capita) into a single metric of development (UNDP, 2025). Unlike GDP, which fluctuates annually, HDI evolves more gradually, reflecting structural improvements in social and economic foundations. Consequently, the UNDP reports HDI values for selected benchmark years rather than annually, specifically 1990, 2000, 2010, 2015, 2020, 2021, 2022, and 2023.

This benchmark-year structure is analytically significant. It allows observation of long-term developmental shifts over decades while reducing the “noise” of short-term fluctuations.

Table 2a: Benchmark-Year HDI Values, Nigeria & Germany (1990-2023)

Year | Nigeria (HDI) | Germany (HDI)
1990 | 0.379 | 0.834
2000 | 0.435 | 0.897
2010 | 0.502 | 0.936
2015 | 0.530 | 0.948
2020 | 0.547 | 0.955
2021 | 0.554 | 0.958
2022 | 0.557 | 0.955
2023 | 0.560 | 0.959
Source: UNDP, Human Development Report 2025 – Statistical Annex: HDI Trends (1990–2023).  Human
Development Reports

For comparative purposes, Nigeria and Germany's HDI trajectories will be assessed in three stages. First, raw benchmark-year values are presented (See Table A2 above) to illustrate trends in both countries. Second, decade-level changes are calculated to provide a clearer picture of progress over time. Finally, cross-country gaps are examined to assess whether Nigeria has been catching up with or falling further behind Germany in terms of human development.

Table 2b: Decade / Period Changes in HDI, Nigeria & Germany

Period | Nigeria: Change in HDI (absolute) | Germany: Change in HDI (absolute)
1990  2000 | 0.056 | 0.063
2000    2010 | 0.067 | 0.039
2010    2015 | 0.028 | 0.012
2015    2020 | 0.017 | 0.007
2020    2023 | 0.013 | 0.004
_So1_u9_r9_c0_e: _ge2_n0_er2_a3_t | _ed _from _UNDP, _Huma0_n.1_D8_e1_velopment _Report _202 | _5 _– _Statistical _Annex:0_H.1_D25_I _Trends _(1990–2023)

.

The table shows that Nigeria recorded steady but modest improvements over the period, moving from very low human development in 1990 to a mid-range HDI by 2023. Notably, Nigeria's strongest gains occurred between 2000 and 2010, driven by rising school enrolment and gradual improvements in health outcomes, though the pace of progress slowed slightly after 2015. By contrast, Germany's HDI values remained consistently high across all decades, reflecting its status as an advanced economy. The smaller numerical changes in Germany's HDI reflect the “ceiling effect” — when countries already near the top of the HDI scale can only achieve marginal increases.

From a theoretical perspective, modernisation theory would interpret Nigeria's trajectory as evidence of gradual structural transformation, with improvements in education and health expected to reinforce growth eventually. However, dependency theory highlights the persistence of structural inequality: Nigeria's relative gap with Germany remains significant, suggesting that integration into the global economy has not eliminated barriers to equitable development. Germany's stable, high HDI performance underscores the advantage of advanced economies in sustaining welfare outcomes even in periods of slower economic growth.

Figure 2: HDI Trends in Nigeria and Germany, 1990–2023

Source: UNDP, Human Development Report 2025 – Statistical
Annex: HDI Trends (1990–2023).

The HDI trajectories in Figure 2 reinforce the contrasts highlighted in Tables 2a (see Appendix
2a) and 2b. Nigeria's curve shows a gradual upward slope, reflecting steady though uneven improvements in life expectancy, education, and income. Despite these gains, the country remains in the “medium human development” category, far below Germany's trajectory. Germany's line, by contrast, begins at a high level in 1990 and flattens toward the upper limit of the HDI scale, underscoring both the maturity of its welfare system and the limited scope for further rapid gains.

The divergence between the two lines illustrates the persistence of structural inequality in global development. From a modernisation theory standpoint, Nigeria's progress confirms the expectation that development unfolds incrementally as investments in education and health translate into rising human capital. However, dependency theory provides an alternative lens: it emphasises how external vulnerabilities, resource dependence, and unequal integration into global markets constrain Nigeria's ability to close the development gap. Germany's consistently higher trajectory reflects the resilience of advanced economies positioned at the core of the global system.

Overall, the figure suggests that while economic growth contributes to human development in both cases, the rate and scale of improvement are shaped by broader structural and institutional contexts. This comparative insight underscores the importance of integrating both modernisation and dependency perspectives when evaluating the growth–development nexus.

In summary, the GDP and HDI analyses reveal a crucial asymmetry in the growth–development relationship. Nigeria has experienced periods of strong GDP growth, particularly in the 2000s, yet its HDI gains have been relatively modest, suggesting weak linkages between macroeconomic expansion and improvements in social welfare. Germany, by contrast, shows lower but steadier GDP growth rates, accompanied by consistently high HDI levels that reflect

inclusive development outcomes. This divergence underscores a central insight: growth alone does not guarantee human development, and structural conditions, policy choices, and institutional capacities mediate the translation of economic gains into welfare improvements. From a theoretical standpoint, Nigeria's trajectory resonates with dependency critiques of externally constrained, resource-driven growth, while Germany's path reflects modernisation expectations of diversified, innovation-led development.

Relationship between GDP Growth and Development Outcomes
The preceding trends reveal that while Nigeria and Germany both experienced episodes of economic expansion between 1990 and 2023, the extent to which GDP growth translated into improvements in human development diverged sharply. This section explores the linkage between economic growth and development outcomes, examining not only statistical associations but also the historical and policy contexts that shaped the observed trajectories.

In Nigeria, periods of robust GDP growth were often driven by oil booms, particularly in the early 2000s, when average annual growth exceeded 7%. However, the Human Development Index (HDI) improved only modestly during the same period, with life expectancy, educational attainment, and poverty reduction lagging behind growth rates. For instance, despite high revenues during the 2000s oil price surge, the poverty headcount remained stubbornly high, and governance challenges (including corruption, fiscal mismanagement, and inadequate investment in social sectors) limited the developmental impact of growth (World Bank, 2023; IMF, 2023). These patterns align with dependency theory, which emphasises the structural vulnerability of resource-dependent economies to external shocks and the weak transmission of commodity-driven growth into broad-based welfare gains.

Germany, by contrast, demonstrated a more consistent alignment between growth and development outcomes. Although average GDP growth was relatively modest compared to Nigeria, particularly in the 2000s and 2010s, HDI scores steadily increased, reflecting gains in life expectancy, educational attainment, and income per capita. For example, even during the global financial crisis of 2008–2009, Germany's strong social welfare systems, vocational training programs, and institutional resilience cushioned the effects of economic contraction, preventing sharp declines in human development (OECD, 2022). This trajectory reflects modernisation theory's proposition that industrialised economies with strong institutions and diversified production structures are better able to channel growth into sustained improvements in welfare.

In view of the foregoing, the evidence suggests that the relationship between growth and development is contingent on structural and institutional conditions rather than growth alone. Nigeria's experience illustrates how high but volatile growth can coexist with persistent development challenges. At the same time, Germany's trajectory demonstrates that even modest growth, when embedded in strong institutions and redistributive systems, can produce significant and sustained development. This comparative finding reinforces the paper's broader argument that GDP growth is neither a sufficient nor a universal driver of development, and its impact must be interpreted within specific national contexts.

While the analyses of GDP growth and HDI trends reveal important insights into Nigeria's and
Germany's developmental trajectories, the interaction between the two indicators is best

appreciated when viewed side by side. To this end, Table 3 provides a comparative summary of average GDP growth rates and HDI progress across four decades, highlighting both the degree of co-movement and the divergence between the two countries.

Table 3: Comparative Co-Movement of GDP Growth and HDI, Nigeria and Germany
(1990–2023)

Deca
de/P erio d

Niger
ia – Avg. GDP Gro wth (%)

Nigeria – HDI
Progress

Germany – Avg.
GDP Growth (%)

Germany – HDI Progress

1990–
1999

2.31

Slow, marginal
gains (0.433
0.466)

2.26

Steady growth (0.822     0.858)

2000–
2009

7.68

Moderate
gains despite oil boom (0.466
0.528)

0.79

Consistent rise (0.858     0.906)

2010–
2019

3.65

Incremental
progress
(0.528
0.575)

1.97

Sustained increase (0.906     0.936)

2020–
2023

1.99

Stagnation
under COVID-19 shocks (0.575
0.548 –
0.554 range)

0.09

Stability with resilience (0.936
0.942)

Source: compiled from World Bank (2024); UNDP (2025).

The table above underscores the contrasting nature of the growth–development relationship. Nigeria experienced rapid GDP growth during the 2000s, yet the corresponding HDI gains were moderate and uneven, reflecting the limitations of resource-driven growth under dependency conditions. Germany, by contrast, combined lower but stable GDP growth with consistent HDI improvements, in line with modernisation theory's expectations of structural transformation and welfare expansion. These patterns confirm that while GDP growth is an important factor, translating it into sustainable development depends on institutional, structural, and distributional contexts.

Institutional and Structural Determinants of Divergent Outcomes
The interplay of institutional capacity, structural composition, and policy frameworks best explains the divergent relationship between GDP growth and development in Nigeria and Germany. While both countries experienced episodes of economic expansion, the pathways through which these gains translated into human development outcomes diverged sharply.

Nigeria: Resource Dependence and Institutional Weakness
Nigeria's growth trajectory has been heavily resource-driven, with oil exports dominating government revenues and foreign exchange earnings. During the oil boom of the 2000s, GDP growth averaged nearly 8 per cent (see Table 1b), yet improvements in human development indicators lagged. One major reason was weak fiscal institutions, where oil rents often fuelled corruption and rent-seeking rather than public investment (World Bank, 2023).

Policy reforms have repeatedly aimed to correct these imbalances, but with mixed outcomes. The Structural Adjustment Programme (SAP) of the late 1980s sought to liberalise the economy and diversify beyond oil, yet it deepened inequality and eroded social services (IMF, 2023). Similarly, the 2004 debt relief deal with the Paris Club freed up fiscal space, but funds were not consistently channelled into human capital sectors (Alsop & Rogger, 2008). More recently, the
2016 recession, triggered by the global oil price collapse, and the COVID-19 pandemic, which caused sharp contractions in non-oil sectors, further exposed Nigeria's vulnerability to external shocks (World Bank, 2023).

Dependency theory explains this persistent disconnect: a peripheral economy integrated into the global system primarily through commodity exports remains structurally dependent on external demand and price fluctuations (Prebisch, 1950, as cited in UNDP, 2025). Without diversification or institutional strengthening, growth has been fragile and unevenly distributed.

Germany: Diversification and Institutional Anchoring
Germany's experience offers a stark contrast. Its social market economy model, rooted in the post-World War II reconstruction period, deliberately combined market dynamism with strong welfare and institutional safeguards. Even when annual GDP growth was modest (averaging below 1 per cent during the 2000s) (see Table 1b), human development outcomes remained consistently high.

This resilience is closely linked to structural diversification and institutional anchoring. The country's Agenda 2010 reforms of the early 2000s (which aimed to reform the German welfare system and labour relations), for example, modernised labour markets, enhanced competitiveness, and maintained social protection, laying the foundation for stable welfare improvements (OECD, 2022). During the Eurozone crisis of 2010–2012 (the 2008 financial crisis that threatened the existence of the euro and led to sovereign debt problems in countries such as Greece, Ireland, and Portugal), Germany's robust industrial base and export-oriented economy provided a buffer against downturns (Storm &Naastepad, 2015). Likewise, during the COVID-19 pandemic, while GDP contracted sharply, institutional strength (universal healthcare, short-time work schemes (Kurzarbeit), and expansive fiscal stimulus) ensured that welfare declines were temporary and relatively mild compared with those of global peers (OECD, 2022).

Modernisation theory resonates with this trajectory: Germany exemplifies the argument that steady industrialisation, technological upgrading, and institutionalised redistribution convert even modest growth into sustained improvements in human development (Acemoglu & Robinson, 2012).

Implication
Nigeria and Germany thus illustrate two archetypal pathways. Nigeria reflects the dependency theory critique, with resource dependence, volatility, and weak institutions limiting development spillovers from growth. Germany embodies the modernisation model, diversified production, strong institutions, and a deliberate social policy that anchors the growth–development link. The comparison underscores that the quality of institutions and economic structures, rather than growth rates per se, determines whether GDP expansion translates into genuine human development. The contrasts highlighted above are summarised in Table 4 below:

Table 4. Institutional and Structural Features of Nigeria and Germany

Dimension | Nigeria | Germany

Economic
Structure

Resource-dependent, dominated by oil
exports (about 80% of government revenue).

Diversified, export-oriented industrial
economy (automobiles, machinery, chemicals).

Institutional
Strength

Weak fiscal and governance institutions;
high corruption and rent-seeking (World
Bank, 2023).

Strong institutions anchored in the rule of law,
transparency, and corporatist arrangements.

Policy
Frameworks

Structural Adjustment Program (1980s),
debt relief (2004), but with inconsistent implementation.

Social market economy; Agenda 2010
reforms; EU integration reinforced structural stability.

Crisis Response

Vulnerable to oil price shocks; weak
buffers against the 2016 recession and the
COVID-19 downturn.

Effective countercyclical policies, including
Kurzarbeit (short-time work) during COVID, cushioned the impacts.

Human
Development
Outcomes

Slow progress in HDI despite high growth
in the 2000s; inequality and poverty remain pervasive.

High HDI maintained even in periods of low
growth; strong welfare redistribution systems.

Theoretical Lens

Aligns with Dependency Theory : external
dependence, fragile institutions, limited spillovers.

Aligns with Modernisation Theory: diversified economy, strong institutions, inclusive policies.

Source: Compiled by author from World Bank (2023), OECD (2022), UNDP (2025).

Discussion and Implications
The comparative analysis of Nigeria and Germany underscores the complexity of the relationship between GDP growth and economic development. While both countries recorded periods of expansion between 1990 and 2023, the developmental payoffs diverged significantly. For Germany, modest but steady growth translated into sustained improvements in human development outcomes, reflected in consistently high Human Development Index (HDI) values. In Nigeria, by contrast, episodes of rapid GDP expansion (particularly during oil booms in the
2000s) did not produce proportional gains in HDI, poverty reduction, or educational and health outcomes (World Bank, 2023; IMF, 2023).

From the perspective of modernisation theory, Germany exemplifies the expected trajectory: growth supported structural diversification, technological advancement, and welfare expansion (Rostow, 1960). Stable institutions and deliberate policy choices ensured that rising output was channelled into education, healthcare, and social protection, creating a virtuous cycle of development (OECD, 2022). Nigeria's case, however, highlights the limits of modernisation theory when applied to resource-dependent economies. Despite strong growth spurts, structural weaknesses and governance challenges undermined the translation of GDP into broad-based development.

Dependency theory offers a more compelling lens for Nigeria's trajectory. The country's reliance on oil exports exposes it to external price shocks and perpetuates its dependence on global commodity markets, thereby constraining domestic industrialisation. The volatility in GDP growth and the weak link to HDI outcomes align with dependency critiques, which argue that growth in peripheral economies often reinforces structural vulnerabilities rather than overcoming them (Prebisch, 1950). Germany's position within the global core, by contrast, enabled it to sustain development even in periods of slower growth, reflecting the asymmetry highlighted by dependency scholars (Storm &Naastepad, 2015).

The implications of these findings are threefold. First, the relationship between GDP growth and development is not automatic but mediated by institutions, diversification, and social policy choices (Rodrik, 2003; Acemoglu & Robinson, 2012). Second, Nigeria's experience demonstrates the risks of resource dependence, where growth can mask underlying fragilities unless accompanied by structural transformation. Third, Germany's example suggests that even modest growth can support high levels of development when embedded within a framework of inclusive policies and strong institutions.

For policymakers, these lessons reinforce the need for Nigeria to prioritise economic diversification, strengthen governance capacity, and ensure inclusive growth. At the same time, Germany's experience illustrates that development is not solely about the pace of growth but about the quality of its distribution and the sustainability of its drivers. Theoretically, the comparative evidence demonstrates that modernisation and dependency perspectives are not mutually exclusive but can be complementary in explaining the divergent outcomes of core and peripheral economies.

Conclusion
This paper examined the effect of GDP growth on economic development by comparing Nigeria and Germany from 1990 to 2023. Using modernisation and dependency theories as guiding lenses, the study demonstrated that the relationship between economic growth and development is complex, context-specific, and mediated by structural and institutional factors.

The findings reveal that Germany's relatively modest but stable GDP growth translated into consistently high human development outcomes, owing to strong institutions, diversified production, and robust social welfare policies. In contrast, Nigeria's episodes of rapid GDP expansion (largely driven by oil revenues) failed to yield commensurate improvements in education, health, and poverty reduction. This divergence reflects the modernisation trajectory in Germany and the constraints on dependency in Nigeria, illustrating that growth alone does not guarantee development.

Theoretically, the study reinforces the complementary value of modernisation and dependency perspectives in explaining cross-country variation. Modernisation theory helps account for Germany's steady development trajectory, while dependency theory highlights the external vulnerabilities and structural rigidities that shape Nigeria's limited developmental gains. Together, these perspectives underscore that growth outcomes cannot be understood in isolation from global positioning, institutional capacity, and domestic policy choices.

By focusing on two contrasting economies, this paper contributes to the literature by showing that GDP growth has heterogeneous developmental consequences depending on structural

conditions. For policymakers, the evidence suggests that Nigeria must go beyond growth targets to prioritise diversification, human capital investment, and institutional strengthening. At the same time, Germany's case illustrates the enduring role of social policies in sustaining development even under modest growth.

Future research could extend this comparative approach to a wider range of countries or employ longitudinal modelling of policy interventions to clarify further the conditions under which growth translates into development.

Appendix A
Table A1. Annual GDP Growth Rates (%) for Nigeria and Germany (1990–2023)

Year | Nigeria (%) | Germany (%)
1990 | 11.8 | 5.3
1991 | 0.4 | 5.1
1992 | 4.6 | 2.0
1993 | -2.0 | -1.0
1994 | -1.8 | 2.6
1995 | -0.1 | 1.5
1996 | 4.2 | 1.0
1997 | 2.9 | 1.9
1998 | 2.6 | 2.1
1999 | 0.6 | 2.1
2000 | 5.0 | 2.9
2001 | 5.9 | 1.6
2002 | 15.3 | -0.2
2003 | 7.3 | -0.5
2004 | 9.3 | 1.2
2005 | 6.4 | 0.9
2006 | 6.1 | 3.9
2007 | 6.6 | 2.9
2008 | 6.8 | 0.9
2009 | 8.0 | -5.5
2010 | 8.0 | 4.1

2011 | 5.3 | 3.8
2012 | 4.2 | 0.5
2013 | 6.7 | 0.4
2014 | 6.3 | 2.2
2015 | 2.7 | 1.7
2016 | -1.6 | 2.3
2017 | 0.8 | 2.7
2018 | 1.9 | 1.1
2019 | 2.2 | 1.0
2020 | -1.8 | -4.1
2021 | 3.6 | 3.7
2022 | 3.3 | 1.4
2023 | 2.9 | -0.3
Source: World Bank, World Development Indicators

REFERENCES
Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and p o v e r t y .   C r o w n   P u b l i s h e r s .   R e t r i e v e d   S e p t e m b e r   1 6 ,   2 0 2 5 ,   f r o m https://ia801506.us.archive.org/27/items/WhyNationsFailTheOriginsODaronAcemogl u/Why-Nations-Fail_-The-Origins-o-Daron-Acemoglu.pdf
Alsop, M., &Rogger, D. (2008). Debt relief and reform: The case of Nigeria's virtual poverty fund. University College London / UK Department for International Development.
Dauda, R. (2019). The paradox of persistent poverty amid high growth: The case of Nigeria. In C.  N.  Morrissey,  P.  C. Anyanwu,  &  C.  C.  Obikili  (Eds.),  Economic  growth  and d e v e l o p m e n t   i n   A f r i c a   ( p p .   2 6 5 – 2 9 0 ) .   O x f o r d   U n i v e r s i t y   P r e s s . https://doi.org/10.1093/oso/9780198832317.003.0011
Easterly, W. (2001). The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics. MIT Press.10.2307/1061505.
Frank, A. G. (1966). The development of underdevelopment. Monthly Review, 18(4), 17–31. International Monetary Fund. (2023, January 12). Nigeria: Selected issues (IMF Country Report
N o .   2 3 / 9 4 ) .   h t t p s : / / w w w. i m f . o r g / - / m e d i a / F i l e s / P u b l i c a t i o n s / C R / 2 0 2 3 / English/1NGAEA2023002.ashx
Izu, I. S. (2021). Matrix and Praxis of Nigerian Political Economy. Kaduna: Joyce Graphic
Printers & Publishers
Lucas,  R.  (1988).  On  the  Mechanics  of  Economic  Development.  Journal  of  Monetary
Economics, 22, 3–42. http://dx.doi.org/10.1016/0304-3932(88)90168-7

Organisation for Economic Co-operation and Development (OECD). (2023). Germany: Economic  Survey  2023.  OECD  Publishing.  Retrieved  September  15,  2025,  from h t t p s : / / w w w. o e c d . o r g / e n / p u b l i c a t i o n s / o e c d - e c o n o m i c - s u r v e y s - g e r m a n y -
2023_9642a3f5-en.html
Organisation for Economic Co-operation and Development (OECD). (2022). OECD Reviews of Innovation Policy: Germany 2022: Building agility for successful transitions. OECD Publishing. Retrieved September 17, 2025, from https://doi.org/10.1787/50b32331-en
Peled, O., & Silber, J. (2019). On Pro-Middle Class Growth. In I. Dasgupta & M. Mitra (Eds.), Deprivation, Inequality and Polarisation (pp. 83–108). Springer. DOI: 10.1007/978-981-
13-7944-4_6
Prebisch, R. (1950). The economic development of Latin America and its principal problems (Economic Commission for Latin America, United Nations Publication E/CN.12/89/Rev.1). United Nations. Retrieved September 15, 2025, from https://www.rrojasdatabank.info/prebisch_theec-development.pdf
Rodrik, D., Subramanian, A., & Trebbi, F. (2004). Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development. Journal of Economic Growth, 9(2), 131–165.
Romer, P. M. (1986). Increasing Returns and Long-Run Growth. Journal of Political Economy,
94(5), 1002–1037. http://www.jstor.org/stable/1833190
Rostow, W. W.  (1960).  The  Stages  of  Economic  Growth: A Non-Communist  Manifesto.
Cambridge University Press.
Sen, A. (1999). Development as Freedom. Oxford University Press.
Shashoua, M., & Basu, S. (2015). Polarising world: GDP, Development and Beyond. United
Nations Economic and Social Commission for Asia and the Pacific (UNESCAP).

Retrieved  September  17,  2025,  from

https://www.unescap.org/sites/default/files/12-

ESCAP-FfD_Polariing%20world_24April2015.pdf
Stiglitz, J. E., Sen, A. K., & Fitoussi, J.-P. (2009). The measurement of economic performance and  social  progress  revisited:  Reflections  and  overview  (Working  Paper  No.  hal-
01069384). HAL. https://hal.science/hal-01069384
Storm, S., &Naastepad, C. W. M. (2015). Crisis and recovery in the German economy: The real l e s s o n s .   S t r u c t u r a l   C h a n g e   a n d   E c o n o m i c   D y n a m i c s ,   3 2 ( C ) ,   11 – 2 4 . https://doi.org/10.1016/j.strueco.2015.01.001
Todaro, M. P., & Smith, S. C. (2020). Economic Development (13th ed.). Pearson.
United Nations Development Programme (UNDP). (2017). UNDP's strategy for inclusive and s u s t a i n a b l e   g r o w t h .   U n i t e d   N a t i o n s   D e v e l o p m e n t   P r o g r a m m e . https://www.undp.org/sites/g/files/zskgke326/files/publications/UNDPs%20Inclusive
%20and%20Sustainable%20Growth-final.pdf
United Nations Development Programme (UNDP). (2020). Human Development Report 2020: The Next Frontier—Human Development and the Anthropocene. New York: UNDP.

R e t r i e v e d   S e p t e m b e r   1 7 ,   2 0 2 5 ,   f r o m files/documents/hdr2020.pdf

h t t p s : / / h d r . u n d p . o r g / s y s t e m /

United Nations Development Programme (UNDP). (2025). Human Development Report 2025: Statistical Annex—Human Development Index trends, 1990–2023. New York: UNDP.

Retrieved  September  17,  2025,  from

https://hdr.undp.org/sites/default/files/2025_

HDR/HDR25_Statistical_Annex_HDI_Trends_Table.pdf

Williamson, J. G. (2008). Globalisation and the Great Divergence: terms of trade booms, volatility and the poor periphery, 1782–1913. European Review of Economic History,
12(3), 355–391. doi:10.1017/S136149160800230X.
World Bank. (2023, June). Nigeria Development Update: Seizing the opportunity (Report No.

P179906). Washington, DC: World Bank Group.

https://documents1.worldbank.org

/curated/en/099062623065078024/pdf/P17990608d087c05f0868f041fca331108b.pdf
World Bank. (n.d.). GDP growth (annual %): Nigeria and Germany, 1990–2024 [Data set].
World  Bank World  Development Indicators.  Retrieved September 18,  2025,  from https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

TIDS JOURNAL OF DEVELOPMENT (TJD) Vol. 1, Issue 1, 2026