Empirical Analysis of the Impact of Road and Construction Capital Expenditure on Economic Growth: Evidence from Nigeria

Abstract

This study examines the impact of road and construction capital expenditure on economic growth in Nigeria. The study covered the period of 1981 to 2020 and employed the Autoregressive Distributed Lag Model (ARDL) to analyze the annual time series data collected from National Bureau of Statistics, BudgiT and Central Bank of Nigeria Statistical Bulletin. While the data for road and construction capital expenditure were collected from NBS and BudgiT database, the data for gross domestic product and commercial banks’ credit to the construction sector were obtained from CBN statistical Bulletin. The findings reveal that government capital expenditure on road and construction has a negative and statistically insignificant impact on economic growth in Nigeria. The result further shows that commercial banks’ credit to the construction sector has a positive but statistically insignificant impact on economic growth in Nigeria. The study therefore recommends that the government should ensure that allocations to this sector are properly monitored in order to enhance economic growth. Government should also encourage banks to give more loans for infrastructural development by reducing the bank rate.