Abstract
<p><em>This research investigates the relevance of government expenditure on poverty reduction in Nigeria. The main objective is thus to investigate whether the poverty reduction efforts through government spending has actually translated into a reduction in the poverty level. The study covered the period between 1980 and 2016. The ECM model and cointegration models of the OLS as well as the granger causality techniques were used to analyze the data. The result of the ADF unit root test indicates that all the variables are I(1). The result of the Johansen cointegration indicates the existence of a long run equilibrium relationship among the variables. The result of the parsimonious ECM indicates that though the one period lag government expenditure on health has a significant and positive impact on the per capita income, it has a low elasticity. The result indicates further that government expenditure on education has a significant and positive impact on the per capita income. The result indicates further that government expenditure on building and construction has a significant and positive impact on the per capita income, the elasticity is however very low. The granger causality test result indicates no causality between government expenditure on health and education. A bicausal relationship however exists between government expenditure on education and per capita income. The result shows no causality between government expenditure on building and construction and the per capita income. The result recommends amongst others an increment and proper monitoring of government spending which could be enhanced through public private partnership.</em></p>
Highlights
Poverty has a global outlook and it affects different people in different regions, continents and countries in different ways
Materials and Methods The model used for the study is stated below: ∆LPCI = bo + b1∆LGBC + b2∆L GED + b3∆LGEH + ECMt-1 + et b1, b2, b3 > 0 Where: GBC = Government expenditure on building and construction GED = Government expenditure on education GEH = Government expenditure on health PCI = Per capita income which is a proxy for welfare
The result concludes that government expenditure on health has a significant impact on per capita income, the low elasticity indicates that government spending on the health sector has been unable to significantly reduce the level of poverty in Nigeria
Summary
Poverty has a global outlook and it affects different people in different regions, continents and countries in different ways. The ADB (2008) noted that African countries witnessed a fall in economic growth by an average of 10.5 percent in 1985and 3.2 percent in 2007 This led to a reduction in the level of poverty from US$1600 ins 1980 in US$1160 in 2008 (ADB, 2010; Mukah, Raji, & Micheal, 2011). National Economic Empowerment and Development Strategies (NEEDS) in 2004, N- Power programme of 2016, School Feeding Programme of 2016, etc Despites these programmes, over 63 percent of Nigerians still leaves below the poverty line. It was noted that the highest 40 percent of Nigerians earn more than 10 percent of Gross National Income with the remaining 60 percent going to 90 percent of the population This casts doubts on the poverty reduction efforts by the government
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