Fiscal Autonomy and Educational Attainment of the Federating States in Nigeria

Abstract

This study investigates the impact of fiscal autonomy on educational attainment of the states in Nigeria. The focus is on the 36 states in Nigeria. The capability of a state to internally generate revenue is a basic requirement in the provision of social infrastructure. In the context of this research, fiscal autonomy was measured as a ratio of internally generated revenue to federal allocation. To investigate the relationship involving fiscal autonomy and educational attainment in Nigeria, instrumental variable three stage least squares (3SLS) panel estimation framework was adopted by this study. The Hausman's test was used to determine the most robust estimates and the Hansen-sargan test was also used to determine if the instrument used was identified between the two-stage and three-stage least squares. The result from the rigorous estimation technique of 3SLS does not seem to give support to the hypothesis that increase in fiscal autonomy can significantly drive increase in literacy rate vis –a-vis educational attainment across the states and hence economic development in Nigeria. The study therefore strongly advocates that states should tow the middle path of not being completely fiscal autonomous in striving for fiscal autonomy as fiscal autonomy itself does not necessarily guarantee high educational attainment of states in Nigeria.