Government Expenditure, Foreign Direct Investment and Economic Growth in Nigeria

Abstract

Government expenditure and Foreign Direct Investment (FDI) are vital macroeconomic variables of any economy as they are strong propellant of economic growth. The need to control and monitoring government spending and the FDI so as to achieve a steady economic growth necessitated this study. The study seeks to determine the impact of government expenditure and FDI on the Nigeria economic growth. A multiple regression analysis was used to test the relationship between government expenditure (capital and recurrent expenditure) and FDI as the explanatory variables on GDP (proxy for economic growth) as the dependent variable. Our result revealed that the explanatory variables: CEXP, REXP and FDI had significant relationship with economic growth. However CEXP did not conform to expectation. Some recommendations such as a thorough and accountable management of capital and recurrent expenditures in Nigeria, adequate planning, an effective macroeconomic framework and conducive economic environment to encourage foreign direct investment is required