IMPACT OF GOVERNMENT EXPENDITURES ON INDUSTRIAL OUTPUT IN NIGERIA

Abstract

The major goal for government expenditure policies according to Keynes is to improve the effective demand which is aimed at increasing industrial output in developing countries like Nigeria. Therefore, this paper is an attempt to examine the impact of government expenditures on industrial output in Nigeria. Thus, the methodology of this paper is the time series data method which were sourced from the Central Bank of Nigeria statistical bulletin 2021 and the study also employed the Fully Modified Ordinary Least Squares (FMOLS) because the data were co-integrated at order 1(1) and the Johansen co-integration test result revealed that there are two (2) co-integrating equations. The R-Square of 98 percent suggests that government expenditures have a positive relationship with industrial output in Nigeria. Specifically, the result revealed that government capital expenditures have a positive and insignificant impact on industrial output in Nigeria. However, the government's recurrent expenditure was said to have a positive and significant impact on industrial output in Nigeria. Therefore, the study recommended that government should review the recurrent expenditures to be real sector and industrial output is driven to increase the impact of industrial output in Nigeria. Similarly, the government should design a mechanism to track the government capital expenditures in Nigeria to ensure that projects are industrial driven especially the infrastructural projects for industrial output in Nigeria.