IMPACT OF FISCAL POLICY DECENTRALIZATION ON ECONOMIC GROWTH IN NIGERIA (1995-2019)

Abstract

Nigeria's fiscal federalism has evolved and reshaped over time as a result of several changes aimed at improving the economy's macroeconomic performance. However, despite the introduction of various fiscal measures, Nigeria's economic growth/performance has slowed, and poverty remains widespread and pervasive, particularly in rural areas. In addition, there has been little empirical research on the consequences of fiscal policy decentralization on Nigeria economic growth. The current study is motivated by previous empirical work's failure to provide a definitive answer to what the overall impact of fiscal decentralization on economic growth is, particularly in Nigeria.The major instrument of analysis in this study was Ordinary Least Squares.All of the variables in the study are appropriately signed, with the exception of total federal government revenue, which is negatively signed. By implication, fiscal policy decentralization measures may promote economic growth. However, the uneven results and statistical insignificance of the three fiscal decentralization measures can be linked to systemic corruption, inadequate leadership, and an unfavorable macroeconomic environment. As a result, the study recommended that if Nigeria is to benefit from the progress that characterizes a fiscally decentralized economy, it should consciously make and implement laws that will foster effective, balanced, and inclusive fiscal decentralization, as well as strengthen and implement laws that will be very hostile to corruption and other forms of sharp practices.