DISAGGREGATED ANALYSIS OF PUBLIC EXPENDITURE AND ECONOMIC DEVELOPMENT ON THE NIGERIAN ECONOMY

Abstract

This study empirically investigated public expenditure and economic development of Nigeria. To achieve this objective, relevant data used spanning from 1981-2021 were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin for the period under review. Descriptive statistics, Augmented Dickey Fuller (ADF) Unit root test, Granger causality and Ordinary Least Square (OLS) regression were the analytical tools for this study. Real Gross Domestic Product (RGDP) was used as the dependent variable while capital expenditure on administration, capital expenditure on economic services, capital expenditure on Social and Community Services, capital expenditure on Transfers, recurrent expenditure on administration, recurrent expenditure on economic services, recurrent expenditure on Social and Community Services, and recurrent expenditure on Transfers as the independent variables. Based on the analysis, the F-statistic of the regression output stood at 56.23992, this implies that the regression plane is statistically significant. Also, the Prob.(F-Statistic) 0.000000 is less than the 0.05 level of significance implies that there is a statistical significant relationship between the variables. R2 = 0.933599 implies that about 93.36% of the total variation in the model specified was accounted for by the independent variables. RGDP and RES are platykurtic, CSCS, RA, and RSCS are mesokurtic, and CA, CES, CSCS, CT, and RT are leptokurtic, according to the descriptive analysis, which also showed that all the variables were normally distributed; All of the variables were stationary and significant at their respective values. RGDP granger caused CA, CES, CSCS, CT, RES, RSCS, and RT, so it is unidirectional causality, however RGDP granger cause RA while RA granger cause RGDP, therefore there is bi-directional causality between the two. There is  the existence of a long-run relationship between the variables as the result the Johansen co-integration test indicates six co-integration equation. Therefore, public expenditure has significant impact on economic development of Nigeria. In conclusion, public expenditure (capital and recurrent) is an important determinants of economic growth and development in Nigeria. The study recommended that Government spending if properly managed will raise the nation’s production capacity and employment, which in turn increase economic growth in Nigeria, also government should increase its expenditure on rural development, roads, water and electrification in order to accelerate the level of productivity, increase income and raise the standard of living of poor citizens in Nigeria

Keywords: Real Gross Domestic Product, Administration, Economic Services, Total Social and Community Services and Total Transfers expenditures.