Impact of Transport and Communication Capital Expenditure on Economic Growth in Nigeria, 1986-2022

Abstract

One of the major impediments to the improvement of the transport and communication sector is inadequate capital spending. Despite the readiness of the government to upgrade the critical infrastructures, there still exist huge infrastructural deficits in Nigeria. Based on these, this study examines the impact of government capital expenditure on transport and communication on economic growth in Nigeria between 1986 and 2021. The study employed autoregressive distributed lag model as the method of analysis and the result reveals that in the long run, government capital expenditure on transport and communication (CEXTRC) with a coefficient value of 0.019, commercial banks’ credit to the transport and communication sector (CBCTRC) with a value of 0.025 and government revenue (GOVR) with a value of 0.065 have positive and significant impact on economic growth in Nigeria. The results also reveal that the inflation rate (INFR) with value of -0.16 has a negative and insignificant impact on economic growth in Nigeria. The short run result found that CEXTRC with value of 0.02, CBCTRC with a value of 0.04, GOVR with a value of 0.21 all have positive and significant impact on economic growth. INFR however shows a negative impact with a coefficient value of -0.28. The study therefore recommends that the government should prioritize the transport and communication sector by allocating more funds in order to provide good transport and communication systems such as railways, roads, waterways, internet, highways and so on. These would help to reduce costs of production, improve better accessibility to markets, create businesses and employment opportunities which will have a multiplier effect on economic growth, by enhancing it.