Abstract
This paper seeks to achieve two objectives. First, we argued for the increase in government expenditure on education and health to examine the possibility of achieving inclusive growth. Second, financing gap model was employed to estimate the potential growth in GDP per capita that is accruable to the economy if government use natural resource rent to finance increase in expenditure of education and health. Relying on dataset for 18 SSA countries, among the results obtained showed that both government expenditures are found to be significant for explaining growth in SSA. However, augmenting health expenditure with natural resource appears to be more significant for making growth process inclusive. Also, the results of the simulation exercise indicate that increasing government expenditure on health would increase GDP per capita growth by over 3.1 %. The policy implication of this is drawn based upon the results obtained.
Highlights
A layman would have an eye-catching and appealing picture of natural resource abundance
Financing gap model was employed to estimate the potential growth in GDP per capita that is accruable to the economy if government use natural resource rent to finance increase in expenditure of education and health
To achieve this: (1) we look at the direct effect of government’s education and health expenditures as well as natural resource rents on inclusive growth process; and (2) we examine if natural resource rents is important for augmenting expenditures on education and health to enhance the inclusion of human capital for inclusive growth process
Summary
A layman would have an eye-catching and appealing picture of natural resource abundance. Nigeria’s 2013 Federal Government Budget was coined ‘Fiscal Consolidation with Inclusive Growth’; in November 2013, the International Monetary Fund (IMF) set inclusive growth as a pivotal part of their research agenda for 2014.3 To further demonstrate the importance of inclusive growth, Organization for Economic Cooperation and Development (OECD) and United Nations Development Programme (UNDP) have actively been engaging in coming up with policy papers geared towards enhancing inclusive growth. Examples of such papers include OECD (2012) whose report identified three problems: poverty, unemployment and inequality, that growth from 1990s to date had failed to tackle. Sections five and six house the empirical result and conclusion respectively
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