Public Expenditure and Economic Development in Nigeria

Abstract

This study empirically investigated the effect of public expenditure on economic development in Nigeria from 1970-2020. To achieve this objective theoretical, conceptual and empirical literature on public expenditure and economic development were reviewed. Public expenditure was proxied by capital and recurrent expenditure while economic development was proxied by gross domestic product and human development index. Secondary data was obtained from central bank statistical bulletin and United Nations development programme reports various years. The study adopts the used of ordinary least square regression statistical tools to test the formulated hypotheses with the aid of Eviews 10 econometric statistical software. The findings show that capital expenditure has positive and significant effect on gross domestic product in Nigeria. Empirical evidence revealed that recurrent expenditure has positive and significant effect on gross domestic product in Nigeria. Empirical evidence shows that capital expenditure has positive and significant impact on human development index in Nigeria. Empirical evidence indicates that recurrent expenditure has positive and insignificant effect on human development index in Nigeria. The study concludes that public expenditure has positive and significant effect on economic development in Nigeria. The study recommends among others that government should improved macroeconomic policies through creation of stable economic policies of low inflation and positive economic growth. The government should ensure free market supply site policies through deregulation, lower taxes, privatization and less regulation to stimulate private sector investment in Nigeria. The government should implement interventionist supply site policies through increase spending on public goods such as health care, education, public transport and massive infrastructural development. Government should ensure diversification from oil and gas to manufactu