Testing Public Expenditure and Poverty Reduction Nexus in Nigeria

Abstract

This study examines the relationship between government expenditure and poverty level in Nigeria so as to be able to find out how expansionary public expenditure has helped in alleviating poverty. The theoretical framework and methodology of this study is based on the Keynesian macro economic framework which assumes that any increase in government expenditure has positive and significant impact on economic growth and by implication on the level of poverty. Therefore, the level of government expenditure on education (especially rural); targeted poverty alleviation; power generation and rural roads are significant in stimulating growth and reducing the poverty level. The study found out that foreign aid has no impact on poverty alleviation, the more the foreign Aid the more the level of poverty. Besides, power generation and total savings are not also significant in reducing or alleviating poverty in Nigeria. The more the expenditure on power, the more the level of poverty. Following the findings, the study therefore recommends the need for establishment of more poverty alleviation programmes and strengthening the existing ones. Further, that the rural areas should be opened up so that the rural dwellers can have access to basic needs of life.