Public Expenditure on Social Capital: Implications for Economic Growth in Nigeria.

Abstract

This Study examined the implications of Public expenditure on social capital for the economic growth of Nigeria (1970-2008). On the application of error correction mechanism and Johansen Co-integration test, the following results were obtained: social capital had insignificant positive impact on Economic growth in Nigeria within the period under review. The result of the Johansen Co-integration test under the assumption of linear determinative trend, its likelihood ratio test indicates (2) Co-integrating equation, at  1%  levels of significance and three (3) co-integrating equations at 5% level of significance. This indicates that there is co-integration among the variables in the model and hence the result can be relied upon in making long-run policy decisions. The study showed that budgetary allocation to the Education Sector which ranged from 0.57 percent to 10.8 percent from 1970-2008 fell below UNESCO recommended 26% provision. The Study also shows that government expenditure on health (both capital and recurrent) has incremental impact on economic growth in Nigeria. This means that any policy shift which allows increase in budgetary allocation to the health sector increases economic growth performance in Nigeria. Consequently the study recommends among other things increased budgetary allocation to the social sector to bring about skilled and healthy human capital that will contribute significantly to the economy and place Nigeria on the right path towards vision 20:20:20.

Keywords: Capital expenditure, Recurrent expenditure, Economic Growth, Social capital, Co integration, Causality