Impact of Government Expenditure on Economic Growth in Nigeria (1987-2017)

Abstract

The main objective of the study is to investigate the impact of government expenditure on economic growth in Nigeria. The variables of capital expenditure on road, capital expenditure on agriculture, recurrent expenditure were regressed on the economic growth in Nigeria over the period of 1987 to 2017. The data will be analyzed with econometric techniques involving Augmented Dicker Fuller and Philip Perron tests for unit roots, Johansson technique for cointegration test for long run relationship and the ordinary least square (OLS). The result of the study indicates that Capital expenditure on road and capital expenditure on agriculture have positive impact on economic growth while recurrent expenditure had a negative impact on economic growth. The Adjusted R-squared is 0.735801 which means that 74% of total variation in gross domestic product (RGDP) can be explained by the variables, namely CER, CEA, and RCE while the remaining 26% is due to other stochastic variables. The study thus concludes that government expenditure has positive effect on economic growth of Nigeria and has helped to improve Nigeria’s   economic growth. Among the recommendations is that the Nigeria government should commit her public expenditure on priority projects that are capable of generating income that will not only produce servicing plat form but will also improve the  economic growth product in Nigeria.