THE RISING GOVERNMENT EXPENDITURE IN NIGERIA: ANY INFLUENCE ON GROWTH?
Abstract
This study attempts to examine whether government expenditure in Nigeria has had any influence on growth in the economy. The study focuses primarily on capital and recurrent types of government expenditure, and these were regressed against the real gross domestic product. Secondary time series data ranging from 1981 to 2016 obtained from the CBN Statistical Bulletin were used. Having established that the series were co-integrated in the long run through the Cointegration technique of Johansen, the study then used the error correction and Granger causality techniques to achieve its objectives. Results indicated that recurrent expenditure exerts a significant positive influence on real GDP, while the influence of capital expenditure on real GDP turned out negative. The Granger causality test revealed that both capital and recurrent expenditures Granger cause real GDP. The study, therefore, advocates for a strong monitoring and evaluation system of the way in which government funds, especially those intended for capital projects, are being used, so as to bring about a meaningful influece on the economy.
References
Abbasov, J. A. & Aliyev, K. (2018). Testing Wagner’s Law and Keeynesian Hypothesis in Selected Post-Soviet Countries, Acta Universitatis Agricuturae et Silviculturae Mendelianae Brunensis, 66(5), 1227-1237.
Adekunle, Z. C. (2007). Unraveling the Mystery between Public Expenditure and Growth: Empirical Evidence from Nigeria. International Journal of Economics, 4(1), 21-31.
Adil, M. H., Ganaie, A. A. & Kamaiah, B. (2017). Wagner’s Hypothesis: An Empirical Verification, IIM Kozhikode Society & Management Review, 6(1), 1–12.
Aigheyisi, O. S. (2013). The Relative Impacts of Federal Capital and Recurrent Expenditures on Nigeria ’ s Economy (1980-2011). American Journal of Economics, 3(5), 210–221.
Akonji, D. R., Olateju, A. O. & Wakili, A. M. (2013). Nexus between Public Expenditure and Economic Growth by testing Wagner’s law Time Series: Evidence from Nigeria. International Journal of Development and Sustainability, 2(4), 2383–2395.
Antonis, A., Constantinos, K & Persefoni, T. (2013). Wagner’s Law versus Keynesian Hypothesis: Evidence from pre-WWII Greece, Panoeconomicus, 4, 457-472.
Awode, S. S. & Akpa, E. O. (2018). Testing Wagner’s Law in Nigeria in the Short and Long Run. Acta Universitatis Danubius. Oeconomica, 14(7).
Ayinde, K., Kuranga, J. & Adewale, F. L. (2015). Modeling Nigerian Government Expenditure, Revenue and Economic Growth: Co-integration, Error Correction Mechanism and Combined Estimators Analysis Approach. Asian Economic and Fianancial Review, 5(6), 858–867.
Babatunde, S. A. (2018). Government Spending on Infrastructure and Economic Growth in Nigeria. Economic Research-Ekonomska Istrazivanja, 31(1), 997-1014.
Chang, T., Liu, W & Caudill, S. B. (2004). A Re-examination of Wagner’s Law for Ten Countries bBased on Cointegration and Error-correction Modelling Techniques, Applied Financial Economics, 14 (8), 577-589.
Chow, Y., Cotsomitis, J. A. & Kwan, A. C. C. (2002). Multivariate Cointegration and Causality Tests of Wagner Hypothesis: Evidence form the UK, Applied Economics, 34 (13), 1671-1677.
Chude, N. P. & Chude, D. I. (2013). Impact of Government Expenditure on Economic Growth in Nigeria. International Journal of Business and Management Review, 1(4), 64–71.
Iheanacho, E. (2016). The Contribution of Government Expenditure on Economic Growth of Nigeria Disaggregated Approach. International Journal of Economics & Management Sciences, 5(5), 1–8.
Kairo, C. I., Mang, N. J., Okeke, A. & Aondo, D. C. (2017). Government Expenditure and Human Capital Development in Nigeria: An Auto-Regressive Distributed Lagged Model Approach (ARDL). International Journal of Advanced Studies in Economics and Public Sector Management, 5(1), 143–158.
Njoku, C. O., Ugwu, K. E. & Chigbu, E. E. (2014). Government Public Expenditures: Effect on Economic Growth (The Case of Nigeria, 1961-2013). International Journal of Research in Management, Science & Technology, 2(1), 16–29.
Olayungbo, D. O. & Olayemi, O. F. (2018). Dynamic Relationship among Non-oil Revenue, Government Spending and Economic Growth in an Oil Producing Country: Evidence from Nigeria. Future Business Journal, 246-260.
Oteng-Abayie, E. F. (2011). Government Expenditure and Economic Growth in Five ECOWAS Countries: A Panel Econometric Estimation, Journal of Economic Theory, 2(3), 11-14.
Oyinlola, M. A. & Akinnibosun, O. (2013). Public Expenditure and Economic Growth Nexus: Further Evidence from Nigeria. Journal of Economics and International Finance, 5(4), 146–154.
Sala-I-Martin, X. and Bairo, R. S. (2012). Public Finance in Model in Economic Growth. The Review of Economic Studies, 59(4), 645–661.
Udoffia, D. T. & Godson, J. R. (2016). The Impact of Federal Government Expenditure on Economic Growth in Nigeria (1981-2014). Greener Journal of Social Sciences, 6(4), 092–105.
Wagner, A. (1958). The Nature of Fiscal Policy. In R. A. Musgrave, & A. T. Peacock, Classics in the Theory of Public Finance (pp. 1-8). London: Macmillan.
