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Capital Expenditure and Economic Development in Nigeria

Sagbara, Emilia Clifford, PhD

Abstract

This study examined the effect of capital expenditure on Nigeria’s gross domestic product and poverty outcomes with the aim of assessing whether public investment contributes simultaneously to economic growth and welfare enhancement. Anchored on a positivist and deductive paradigm, the research adopted an ex-post facto design and time-series analytical procedures consistent with established public expenditure scholarship. Secondary data covering 1982–2022 were sourced from the UNDP Human Development Reports, World Development Indicators, and the Central Bank of Nigeria Statistical Bulletin, following methodological precedents in fiscal policy and development studies. The analysis employed descriptive statistics, Augmented Dickey–Fuller unit root tests, and Granger causality procedures to verify statistical properties, while multiple regression (OLS) techniques were applied to estimate the effects of capital expenditure on GDP and the poverty index. The findings show that capital expenditure exerts a positive and statistically significant impact on economic growth, demonstrating its role in expanding productive capacity. In contrast, capital expenditure exhibited no significant effect on poverty reduction, revealing a structural disconnect between growth-driven public investments and welfare outcomes. The study concludes that although capital expenditure contributes meaningfully to macroeconomic expansion, its poverty-reducing potential remains weak due to issues of allocation efficiency, geographical imbalance, and limited social impact targeting. It recommends that government strengthen the productivity, transparency, and implementation quality of capital projects to maximize growth spillovers. It further recommends reorienting capital spending toward education, healthcare, rural infrastructure, and inclusive social programmes capable of improving living standards and ensuring that vulnerable groups directly benefit from publ

Keywords

Capital ExpenditureEconomic GrowthPoverty ReductionPublic Investment

References

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