The Impact of Government Expenditure on Economic Growth in Nigeria

The Impact of Government Expenditure on Economic Growth in Nigeria.

ABSTRACT

This research work tries to examine the impact of government expenditure on economic growth in Nigeria from 1980-2015, using gross domestic product (GDP) as the dependent variable, capital expenditure, recurrent expenditure and inflation as independent variables.

This work was done using ordinary least square (OLS), regression technique with the aid of computer software, for a 1988-2015 time series data. Engel and Granger two step method was also employed in this research work.

This study found that capital expenditure has a positive relationship with economic growth in Nigeria, this relationship is in conformity with economic theory. The ADF unit root also showed that the variables in this research work are not stationary at first difference.

The study recommends that government should ensure and encourage the education and health sectors and also provide the basic social amenities for the general public through increased funding and as well as ensuring that these resources are properly managed and used for the development and provision of this services to help improve the standard of living of people.
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INTRODUCTION

Government expenditure or government spending includes all government consumption, investment and transfer payment. It also includes the provision of public social amenities like infrastructure, health sector and educational sector and also the provision of public goods to directly satisfy the individual or collective needs of the society.

In almost all economies today, government intervention in undertaking fundamental roles of allocation, stabilization, distribution and regulation has helped put the economy in a good shape, especially where or when market proves inefficient or its  outcome is socially unacceptable.

Government also intervenes, particularly in developing economies to achieve macro economics objectives such as economic growth and development, price stability and poverty reduction (AESS Publication, 2011).

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