Government Expenditure and Economic Growth: Evidence from the Nigeria Economy (1981 – 2016)

Abstract

The effect of government expenditure on economic growth in Nigeria for a period of thirty-six (36) years that is, from 1981 to 2016 was the focus of this study. This study was inspired by two leading controversial issues in theoretical literature and empirical studies regarding the effect of government expenditure on economic growth for emerging economies. First, within the theoretical claim, Keynesian school of thoughts assert the presence of positive linkage between government expenditure and economic growth and development, while neoclassical economists refute this assertion and posited a negative association between government expenditure and economic growth and development. Identifying the side of these two arguments that is akin to all economies remains a puzzle among scholars as validation of either theory across the globe is still in vain. Secondly, the direction of relationship/causality between government expenditure and economic growth and development over the years is still not clear, especially for developing countries. Specifically, this study ascertained the effect of government recurrent and capital expenditure on the growth rate of real gross domestic product. We applied the Autoregressive Distributive Lag (ARDL) Co-integration and Granger causality test using secondary data from the Central Bank of Nigeria. We found that Nigeria’s economic growth is independent/not affected by government recurrent and capital expenditure. We are of the opinion that the Federal Government through its appointed ministers in collaboration with the legislature review the composition of Federal Government of Nigeria total expenditure by ensuring that capital expenditure takes at least 50% of annual total expenditure. Measures such as reducing foreign training and bogus allowances for political office holders should be tailored towards reducing government consumption expenditures.

Effect of petrol subsidy removal on government income, cost of living, consumption patterns, savings and investment, and SMEs performance

“…Government revenue is an important component of a country's overall economic health since it directly affects the government's capacity to meet its responsibilities and support its population's well-being. Government revenue is critical for funding public services, infrastructure development, education, healthcare, social safety nets, defense, and other key state tasks (Jeff-Anyeneh & Ibenta, 2019). Effective government income management necessitates a delicate balance of tax collection, fiscal prudence, and the allocation of funds to address pressing national needs.…”

Public Sector Financial Management and Economic Growth Sustainability in Nigeria: 1986 to 2020

“…We did, however, explore the three primary theories in terms of their relevance to emerging nations. To begin, according to Jeff-Anyeneh & Ibenta (2019), money is all that matters in terms of sustaining economic growth and development, and as such, it is the government that is capable of effectively and efficiently providing such magnitudes of money via public spending. Conventionally, this assertion appears to be correct, but it would be undermined by a country's environment characterized by nepotism, corruption, and embezzlement of public funds, as is the case in Nigeria, as evidenced by the Economic and Financial Crimes Commission's trial of several public officials (EFCC).…”

The Effects of Fiscal Policy on Poverty Alleviation in Nigeria

“…Therefore, improvement in well-being requires policies that will lead to reduction in poverty, create employment and reduce inequality (Metu & Kalu, 2020). The channel to pacifying the needs of the citizens by governments is to embark on expenditure through the allocation of funds to various sectors of the economy (Jeff-Anyeneh & Ibenta, 2019). Nigeria is a large country, with a population of over 180 million which makes it the most populated country in Africa, equally has about 50% of its population living in extreme poverty, this is indeed a reflection of the highest poverty level globally.…”