Exploration of public spending and agricultural growth. Comparative analysis of Nigerian and Malaysian agricultural growth (1970-2010).

Abstract

Public expenditure in the form of budget is making a provision for development for today and in the future. Over the year’s sustainable budget provisions has been a contentious issue in Economic development. Public expenditure is a fiscal instrument that government uses to sustain the economy. The question is “what is to be sustained” and “what is to be developed”. This is the rationale for this study. Literature has revealed that Nigeria and Malaysia are comptemporaries in terms of development in the 1960s, recent findings revealed that Malaysia is advanced in economic development than Nigeria. The study answer two precise questions: policy settings under which public spending contributes to agricultural growth? and public spending mechanisms that have a clearer and longer-lasting influence on agricultural growth? The study aim to establish a link to public spending in Malaysia and provide lessons regarding the level and composition of public spending that can be useful for Nigeria. Secondary data used and sourced from FAOSTAT and International Monetary Fund's Government Finance Statistics (various issues) from 1970 to 2010. Simple version endogenous growth theory adopted. Government expenditures as a percentage of GDP in Nigeria witnessed massive public funding in Agriculture in the 1960s-1980s but decline in 1990s-2010, while Malaysian experienced consistency, both in public funding in agriculture and growth. Malaysia as the better manager in terms of components of growth than Nigeria. Malaysia reflects a clear predominance of productive spending, which is sustained through the decades of analysis, while Nigeria predominance of unproductive spending.