Public Expenditure and Economic Development in Nigeria

Abstract

Abstract: The main objective of this study was to investigate the impact of public expenditure on economic development in Nigeria. The design adopted for this study was ex-post-facto; data used for analysis were elicited from Central Bank Statistical Bulletin and Federal Ministry of Finance. To achieve this broad objective, a model was formulated based on empirical and theoretical reviews. The model used Human Development Index (HDI) as the dependent variable while public capital expenditure, public recurrent expenditure and external borrowing were the independent variables in the model. This study employed the Fully Modified Least Squares (FMOLS) Model to analyze data.The findings elicited from this study revealed that public capital expenditure, public recurrent expenditure and external borrowing all had positive and significant impact on human development index within the scope of this study. Inferential result deduced that public expenditure had positive and significant impact on economic development in Nigeria. The study recommended that urgent need to instill fiscal discipline in government expenditures by initiating far reaching effective internal control measures and more proactive economic management coordination and implementation as well as discouraging all non-productive activities and expenditures in all tiers of government forthwith. Government recurrent expenditure should be channeled to have effects on the economy, enhancing and promoting growth and development in the process. All non- productive activities and expenditure need to be reviewed forthwith while the role of government should be reappraised with more emphasis on providing the enabling policy environment for private sector initiatives.