Social and Community Services Government Expenditure and Nigeria’s Economic Growth

Abstract

Government expenditures are very crucial instruments for economic growth at the disposal of policy makers in developing countries like Nigeria. The study, “total government expenditure on social and community services and its effect on economic growth in Nigeria”, is an attempt at highlighting the quantity and quality of national commitment (through public expenditure) to education, health and the socially and economically disadvantaged using time series data from 1961 to 2013, obtained from the Central Bank of Nigeria Annual Report and Statement of Account. Using error correction model (ECM), the results indicate that total expenditure on social and community services is not statistically significant but has a positive relationship on economic growth in Nigeria in the long run, while in the short run, total expenditure on social and community services is highly and statistically significant and has a positive relationship on economic growth in Nigeria, and the speed of adjustment to equilibrium is 44 % within a year when the variables wander away from their equilibrium values. The result of Granger causality does validate the applicability of Wagner’s law in Nigeria but doesn’t support a unidirectional causality from public expenditure to growth and thereby not validating the applicability of Keynesian approach in the country. The result has an important implication in terms of policy and budget implementation in Nigerian. We conclude that economic growth has a positive relationship with total expenditure on social and community services and recommends that there is need to increase the allocation meant for the sectors and also ensure that the resources are properly managed and used.