Public Expenditure and Economic Development in Nigeria (1981- 2022)

Abstract

This study examined the effect of public expenditure on economic development of Nigeria using time series data from 1981-2022. The research design is ex-post facto with time series data collected from Central Bank of Nigeria Statistical Bulletin and Nigeria Bureau of Statistics. Using Augmented Dickey-Fuller for unit root test all the variables was stationary at first difference. The Johansen co-integration test revealed a long-run equilibrium relationship among the variables. Analyzing the data with Vector Error Correction Model the results reveal that expenditure on economic service, social and community services have positive effect on Nigeria human capital index while administration and transfer have negative effect on human capital index. The study recommend that government should continue to increase it’s funding on economic services, social and community services in order to increase the level of productivity and welfare of workforce enhance food security, employment generation and economic and business activities in the agro- allied sector. All these will help improve development of the economy. Nigerian government should limit its expenditure on administration and transfers and devote much in on productive expenditures. The results of this study have provided further empirical evidence on the impact of government expenditure on critical sectors of the economy such as education, health, agriculture which are component of economic, social and community services.

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