The Effect of Public Expenditure on the Economic Growth in Nigeria (1980-2013)

Abstract

This study examined the impact of public expenditure on economic growth of Nigeria; from the period 1980-2013.Secondary data were collected from Central Bank of Nigeria (CBN) statistical bulletin. The core objective of this study is to determine the impact of public expenditure on Nigeria’s economic growth. In the model specification, multiple regression model was adopted, having reviewed the literature theoretically as well as empirically. The results obtained from our analysis revealed that less or no significant relationship existed between Nigeria’s real public expenditure and level of economic growth from 1980-2013. However in terms of the individual contribution on the dependent variable, it was discovered that at 5% level of significance, all the variables are insignificant. This therefore, indicates a negative effect on the level of economic growth in Nigeria. The work therefore concludes that in the long-run, all the problems of inconsistency in the government spending will be corrected since there is a long-run relationship among the parameters estimates. The work finally recommends that government should ensure that capital and recurrent expenditure are properly managed so as to raise the nation’s productive capacity. Also recommended in the study is proper monitoring of government expenditure in order to avoid misappropriation and diversion of funds and finally, government should direct more expenditure towards the production sector of the economy so as to reduce the cost of living as well as raising the standard of living f the citizenry.

Keywords: Cointegration, Capital formation, Economic growth, Public expenditure