Impact of Government Expenditure on Nigeria’s Economic Growth

Abstract

Continuous and impartial economic growth is a major objective of government expenditure policy and as such, it is obligatory of any government to allocate public spending across different sectors of the economy. Over the years some scholars contend that increase in government expenditures do not promote economic growth while some contend that government expenditure do promote economic growth. This study examined the impact of government expenditure on economic growth in Nigeria. The major objective was to investigate the extent of the impact of recurrent expenditure and capital expenditure on the Nigerian economy. The study adopted expost facto research design using descriptive and inferential research design. It used annual time series data extracted from the Central Bank of Nigeria statistical bulletin for the year 1981 to 2018. For the data analyses, the study used descriptive statistics and correlation matrix and employed the multiple regression techniques of the ordinary least squares (OLS) where gross domestic product (GDP) (dependent variable) is responsive to recurrent expenditure, and capital expenditure (independent variable). The results revealed that government expenditure (recurrent and capital expenditure) have significant impact onthe economic growth in Nigeria. Particularly, government recurrent expenditure has positive and significant effect on the economic growth in Nigerian. The government capital expenditure has a non-positive effect on economic growth in Nigeria. The study therefore concludes that government expenditure has significant impact on the economic growth in Nigeria. The study recommended that Government should increase her budgetary allocation to capital projects and an effective utilization of such funds is also advocated and all areas of wastages should be blocked, government should pay more attention to the economic services sectors by compelling non governmental financial institutions like commercial banks to supplement government efforts at financing agriculture through the disbursement of loans at low interest rate at the appropriate time in order to avoid the diversion of such loans.