The Impact of Public Sector Spending on Economic Growth of Nigeria

Abstract

The study investigated the impact of public sector spending (administration, agriculture, education, economic, social and community transfer, industry and health services) on economic growth in Nigeria for the period spanning between 1960-2010.The objectives of the study are to estimate the relationship between aggregate public sector spending on economic growth and determining the specific public sector spending variables on economic growth. The variables were tested for stationarity and cointegration while regression and correlation analyses were used as analytical techniques.

The results found out that recurrent and capital expenditure contributed positively to economic growth with particular reference to the period under review, The result therefore revealed that capital and recurrent expenditures are significant at 1% level.  The study concluded that the government recurrent and capital expenditure have significant influence on economic growth in Nigeria. More so, the result of disaggregated analysis concluded that agriculture, social and community services, health and services are significant variables of government spending contributing to economic growth in Nigeria.

Keywords: Public sector, Stationarity, co-integration, Capital expenditure, recurrent, economic growth.