Abstract
The study investigated the impact of public expenditure on the economic growth of Nigeria: A disaggregated analysis. Annual time series data were obtained from the Central Bank of Nigeria Statistical Bulletin for the period 1981 to 2016 on the variables used for the study. Unit root test was conducted using Augmented Dickey-Fuller test technique and the result showed that the variables were stationary though at different levels. Co-integrated test was also conducted using Johanssen co-integration test method and the result showed that the variables in the model are co-integrated meaning that the variables have a long run relationship. The error correction mechanism shows a very high coefficient of multiple determination (R 2 ) in both the overparameterized model (99%) and the parsimonious model (99%). The short run regression result shows that all the components of public capital expenditure have a positive impact except public capital expenditure on administration and transfers that have a negative impact on the economic growth of Nigeria while all the components of public recurrent expenditure has a positive impact except public recurrent expenditure on economic services that has a negative impact on the economic growth of Nigeria.. The result from long run dynamic analysis also revealed that both components of capital and recurrent public expenditure have a positive and significant effect on the economic growth of Nigeria. Based on the, it was recommended that government should increase its capital and recurrent expenditure. Keywords: Public expenditure, capital expenditure recurrent expenditure, economic growth DOI : 10.7176/EJBM/11-18-02 Publication date :June 30 th 2019
Highlights
The state spends on defence, education and other social services
HO2: Public capital expenditure on economic services does not have any impact on economic growth in Nigeria
Findings from the analysis revealed that recurrent expenditure had a significant relationship on the growth and development of Nigeria economy; capital expenditure had a significant effect on the growth and development of Nigeria economy and aggregate expenditure had a positive impact on the growth of Nigerian economy
Summary
The state spends on defence, education and other social services. It spends on servicing national debts, capital investments. Since market mechanism fails to bring about the desired result in the economy, this has forced the government to intervene This is one of the contributory factors that led to the increasing state expenditure (Likita, 1999). Chinwoke (2014) defined capital expenditure as the expenditures on the acquisition of things of permanent nature They include all expenditures on public projects such as buildings, construction of roads, bridges and all permanent structures and assets. Likita (1999) sees recurrent expenditure as spending on services to maintain the existing facilities in the economy, including wages and salaries, maintenance of social services and security. Chinwoke (2014) classified major areas of government expenditure in Nigeria to include administration, economic services, infrastructural and social amenities, national security and defence, grants and aids. According to Chinwoke (2014), the effects of public expenditure include: stimulation of production in the economy, economic stabilization, stimulation of research and development in an economy, aiding the development of basic infrastructure and stimulation of economic growth
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