An Empirical Analysis of the Distributional Impact of Public Expenditure Pattern on Human Development in Nigeria States

Abstract

This study is to empirically analyze the distributional impact of public expenditure pattern on human development using data for 20 states in Nigeria for the period, 1996-2012. Based on the results of fixed-effects model, the analysis reveals that the effect of sectoral changes in public expenditure on human development differs. While a change in education, health, agriculture, rural development and water resources expenditure has an increasing effect, a change in energy and housing expenditure has a decreasing effect on human development. In all, the estimated coefficient reveals that public expenditure has not robustly impacted on human development across states and period covered by the study. It is therefore recommended that it is imperative for the states to improve and sustain human development expenditure focusing more on education, health, agriculture, rural development and portable water resources since they have positive marginal impact on human development. Moreover, states in Nigeria should develop an expenditure framework for equitable human development expenditure that would benefit all in the near future. More importantly, there is urgent need for reform in expenditure pattern among states in Nigeria. This is to ensure that more money is allocated to those sectors that have higher capabilities of fostering human development.

Keywords: Public expenditure; Human development; Panel data; fixed effect