Recurrent Expenditure Research Articles

The Impact of Capital Expenditure on Ethiopian Economic Growth

This study investigates the effect of disaggregated capital expenditure on economic growth in Ethiopia over the period from 1981 to 2021. An autoregressive distributed lag (ARDL) model, combined with a Granger causality test, is used for the econometric analysis. The empirical results reveal that capital expenditure on economic development (CAEE), recurrent expenditure (RCE), and the inflation rate (CPI) have significant positive impacts on economic growth in both the long run and short run. However, capital expenditure on administrative and general development (CEAG) has a significant negative effect on economic growth in the long run. The Granger causality test further indicates unidirectional causality from economic growth (GNI) to capital expenditure on economic development (CAEE). Based on these findings, the study recommends that the Ministry of Finance should increase its budget allocations for capital expenditures aimed at economic development in order to further stimulate economic growth. Additionally, the government should implement stricter follow-up and monitoring mechanisms to ensure the proper management of budget allocations, particularly regarding capital expenditures on social development and administrative and general development. These measures are crucial for sustaining long-term economic growth in Ethiopia.

Empirical Analysis of the Impact of Debt Servicing on the Performance of the Nigerian Economy

The study interrogates the impact of debt servicing on the performance of the Nigerian economy. Using yearly time series data from 1980 to 2022 obtained from Debt Management Office, Central Bank of Nigeria and the World Bank National Account. The dependent variable in the model was Growth Rate of Gross Domestic Product (GRGDP), and the explanatory variables were External Debt Service (EDS), Domestic Debt Service (DDS), Interest Rate (INR) and Exchange Rate (EXR). The methodology utilized was the popular Auto-Regressive Distributed Lag (ARDL) model. Findings reveal that in the long run, EDS has a positive though insignificant nexus to GRGDP. For DDS the relationship is a significant negative association with GRGDP. Whilst for Exchange Rate a positive and significant relationship was found. INR had a positive but insignificant nexus to GRGDP. Based on the findings the study recommended the review of Nigeria’s debt sustainability plan, imposition of strict limits on amount to borrow, type and the sources from where to borrow. Also, Nigeria government should ensure that debt or borrowings are channeled towards project that are self-liquidating and infrastructure development as well as minimize the use of huge debt to finance recurrent expenditures.

An Analysis of the Economic Performance of Nepal’s Provinces

This study analyzes the economic performance of Nepal’s provinces by employing descriptive approach. Secondary data related to the key indicators showing economic performance of provinces, i.e. economic growth, per capita income, contribution to gross domestic product, expenditure and receipt were examined for the period 2018/19-2022/23. The findings reveal a concerning trend of weak economic growth across Nepal’s provinces. The per capita income of most of the provinces is low while provincial transfer dependency is high. Provinces were found to allocate relatively higher proportion of their budget to capital expenditure compared to re-current expenditure. Among the provinces, Bagmati, Gandaki and Koshi have relatively better economic performance compared to other provinces in terms of indicators considered.

EFFECT OF SUBNATIONAL PUBLIC EXPENDITURE ON STATES’ FISCAL SUSTAINABILITY IN NIGERIA

Objectives: The study examined the effect of subnational public expenditure on states’ fiscal sustainability in Nigeria. Specifically, the study examined the effect of capital expenditure and recurrent expenditure on states’ fiscal sustainability in Nigeria. Methods Ex-post facto research design was adopted to carry out the research for the period 2016-2022. The panel data were collected and sourced from Audited Financial Statements of subnational, CBN statistical Bulletin, CBN Annual report and accounts, other CBN publications, publications of the National Bureau of Statistics (NBS), and Ministry of Finance (MOF) Medium Term Fiscal Framework and other publications of 36 states. Panel regression was used to analyse the hypothesis significant effect between subnational public expenditure and states’ fiscal sustainability in Nigeria with the aid of E-views 12. Results: The study found that capital expenditure has a significant effect on states’ fiscal sustainability in Nigeria. The study also found that recurrent expenditure negatively affects states’ fiscal sustainability in Nigeria. Conclusion: The study recommends that the state governments of Nigeria should adhere strictly to the implementation of capital expenditure so as to increase the level of infrastructural and productive base in Nigeria which will have the capacity to stimulate economic growth and create employment. Also, state governments should decrease spending, particularly regarding recurrent expenditure, to reduce the cost of governance in the country. This is because our results indicated that an increase in government recurrent expenditure reduces the level of the sustainability index.

Non-Linear Causal Links amongst Functional Recurrent Components of Government Spending and Nigeria’s Economic Growth

This research work examined the relationship between components of government recurrent spending and economic growth in Nigeria. Government recurrent spending is split into four categories, namely: economic services, administration, transfers and social services. The aim is to isolate and place emphasis on their individual relationship with economic growth between 1981 and 2022. Within the VAR Toda-Yamamoto specification, nonlinear causal relationships were analysed using positive and negative shocks generated from the ARDL framework. Results from the empirical finding after unit root (all of order 1) and co-integration (at least one co-integrating vector) tests were carried out and indicated that administration has a causal relationship that is unidirectional with economic expansion. Also, all the functional components of recurrent government expenditures are jointly correlated to cause economic growth in Nigeria. These outcomes depict that Nigeria needs to increase its spending on all these functional components in order to have a better and robust growth and development. Capital projects like Ajaokuta Steel and the nation's refineries should also receive priority as it will indirectly increase the causal effects of recurrent components of government spending on the Nigeria’s economic growth.

Public expenditure and performance of the agricultural sector: evidence from Sri Lanka

This study investigates the influence of agricultural public expenditure on the performance of Sri Lanka's agriculture sector. Utilizing data sourced from the annual reports of the Ministry of Finance spanning 2011 to 2022, the findings reveal a significant and positive correlation between the recurrent expenditure of the Department of Agriculture (DoA) and the gross domestic production of the agriculture sector (p < 0.01). However, no statistical evidence supports a significant relationship between the Ministry of Agriculture's (MoA) capital expenditure and DoA and the performance of the agriculture sector. These results underscore the pivotal role of public recurrent agricultural expenditure in bolstering the agriculture sector's performance. Particularly noteworthy is the significant impact of DoA's recurrent expenditure on sectoral performance. The study advocates for increased budget allocation towards recurrent expenditure within the agriculture sector, especially emphasizing the importance of augmenting the DoA's recurrent expenditure to ensure enhanced performance and sustainability. Ultimately, the study underscores the critical importance of effective and efficient management of public funds in driving the agriculture sector's performance.

Impact of recurrent and non-recurrent government expenditure on Bosnia and Herzegovina’s economic growth: an empirical analysis (1996–2022)

This study aims to investigate the differential impacts of recurrent and non-recurrent government expenditures on the gross domestic product (GDP) of Bosnia and Herzegovina from 1996 to 2022. Aggregating data from various government levels, it employs ordinary least squares (OLS) regression techniques to analyze the relationship between these types of expenditures and economic growth. The findings reveal a significant positive correlation between recurrent expenditure and GDP, indicating that spending on health, education, and security contributes to economic growth. Conversely, non-recurrent expenditure, encompassing capital and development investments, does not show a statistically significant impact on GDP in the short term. This suggests that while recurrent spending is crucial for immediate economic performance, non-recurrent investments require strategic planning and efficiency to realize their growth potential. The study underscores the importance of efficient expenditure allocation in transitioning economies like Bosnia and Herzegovina, highlighting the need for a balanced fiscal strategy that supports both immediate economic stability and long-term development.

Investigating institutional and expenditure patterns on debt and economic growth in Ghana

AbstractThis study investigates the influence of government expenditure and institutions on public debt accumulation and economic growth in Ghana between 1990 and 2019. The paper examines how public debt is utilized for government spending on capital and recurrent expenditure, and the role bureaucratic quality plays in improving economic growth. The employed estimation technique is structural equation modelling because it effectively assesses complex situations and allows the modelling of complex systems by utilizing simultaneous equations, mediator analysis and modification indices to improve the goodness of fit of a model. The study indicates that public debt negatively affects GDP growth, whereas trade openness positively influences GDP growth and public debt accumulation. Bureaucratic quality impacts GDP growth positively and capital expenditure negatively. Recurrent expenditure positively predicts GDP growth and capital expenditure. Capital expenditure's effect on GDP growth is negative but statistically insignificant. The right checks and balances should be implemented to mitigate rent‐seeking and corrupt activities associated with bureaucracy. Tax revenue mobilization should be improved to reduce budget deficits and borrowing, whereas exports should be promoted through improving local industries. Finally, all infrastructural projects must be completed to serve their purpose.

Public Spending and Economic Growth in Nigeria: Assessing Recurrent Expenditure’s Neutrality and Monetary Policy Interaction

In this study, we explored the influence of public spending on economic growth in Nigeria by testing the neutrality/non-neutrality of recurrent expenditure, as well as checking for the effect of interaction of the two expenditure components with monetary policy (interest rate) to see how they would influence economic growth. Data which covers the period 1981 to 2021 were analyzed using the technique of Autoregressive Distributed Lag (ARDL) model which was selected based on the fact that our variables were stationary at mixed order of levels and first difference. From the ARDL bounds test, the study revealed that there is a long-run relationship among the variables in the model which prompts the estimation of the error correction model. From the result, the findings suggest that recurrent expenditure exerts a positive and significant effect on economic growth, thereby signifying the non-neutrality of the recurrent expenditure component on economic growth. Further, the interactive terms indicates that an interaction of recurrent expenditure and interest rate on economic growth generated a negative effect though its one-period lag yields a positive and significant effect. Also, the long-run result indicates that recurrent expenditure yielded a positive but insignificant effect, thereby indicating the validity of the recurrent expenditure in the long-run. This is further confirmed as it exerted a negative but insignificant effect on economic growth when interacted with monetary policy. The policy implication of the findings centres on the fact that recurrent expenditure can only be non-neutral in influencing the macroeconomy just in the short-run.

Two-Stage Least Squares and Three-Stage Least Squares in Modelling Nigerian Economic Growth

Every Country strives to attain economic stability. In a bid to achieve this, several economic indices are explored to make this a reality. This study focused on analysis of two stage and three stage least squares (2SLS and 3SLS) in modeling Nigerian economic growth. Considering the limitations of ordinary least squares (OLS) in dealing with simultaneous equations, we explored the use of two stage and three stage least squares which are more robust methods for this purpose. A secondary data was obtained from Central Bank of Nigeria bullion and the National Bureau of Statistics bulletin to investigate the relationship among economic growth, capital inflow and external debt servicing. Models for GDP, external debt servicing and capital inflow were obtained using R and Microsoft excel statistical packages. The study shows with coefficients of 3.9159 and -6.1878, that foreign debt- servicing has negative impact on GDP in the 2SLS and 3SLS models respectively: which is not significant in the 2SLS but significant in the 3SLS model. Also, GDP has negative, though significant effect on capital inflow with coefficient of -0.010495 and -0.0139109 in the 2SLS and 3SLS models respectively: a pointer to the effects of insecurity in Nigerian economic growth. The study recommends that Government should deplete existing external debt stock, increase utilization of capital stock and labour force, reduce borrowing rate, resort to alternative ways of enhancing both current and recurrent expenditures and deal with insecurity.

The Effect of Government Recurrent Expenditure on the Economic Growth in Sierra Leone

Economic growth is important for poverty reduction and it is of interest to all policy makers. Also, determining the expenditure pattern is important for boosting the revenue base and hence growth and it takes various forms. The study therefore investigates the effect of recurrent expenditure on economic growth in Sierra Leone. The data uses an aggregate amount of data on real GDP, public consumption, and other control variable for the period 1992 to 2022. Variables are tested for the existence of unit roots and the Autoregressive Distributed Lag (ARDL) was used to test for cointegration and estimation of short-run and long-run models of growth. The results show that public consumption has a negative effect on economic growth in Sierra Leone. Other results show that real exchange rate and inflation have a negative effect on real GDP growth. Public consumption which serves as one of the key variables that determines recurrent expenditure portrays a negative effect on the economic growth in Sierra Leone in the long run. The policy recommendation is that the government should reduce extra-budgetary support by cutting down recurrent expenditure on the consumption of fuel, per deem, and rent age of private enterprises to host government conference meetings.

Public finance instruments and output growth in Nigeria

This study investigates the empirical relationship between the aggregated and disaggregated components of fiscal policy variables and output growth in Nigeria using the vector error correction mechanism for the period of 1981 to 2021. This formulation was an improvement over previous empirical studies of the impact of public finance instruments on output growth in Nigeria. Our findings suggest that fiscal policy instruments (total expenditure, capital expenditure, recurrent expenditure, total revenue, primary fiscal balance, domestic debt, external debt, oil tax revenue, and non-oil tax revenue) exert significant impacts on output growth and most of the empirical results obtained support the hypothesised relationships between public finance instruments and output growth in Nigeria. However, aggregate federal government expenditure exerts a significant negative impact on output growth, while on the disaggregated scale, capital expenditure exerts a significant positive influence on output growth whereas recurrent expenditure exerts a significant negative impact on output growth. Given these findings, we recommend that the government of Nigeria, through its fiscal authorities, should adopt growth-enhancing fiscal policies that would engender macroeconomic stability and will be potent in refocusing recurrent expenditure towards ensuring productivity growth.

Threshold Analysis of Fiscal Policy Variables and Private Investment in Nigeria

This paper investigates the relationship between fiscal policy variables and private investment in Nigeria for the period 1970 – 2019 with a view to establishing the threshold level of each of the key fiscal policy variables in relation to private investment. The study employed annual and quarterly time series data covering the period 1970:1 to 2019:4 which were sourced in part from the Central Bank of Nigeria’s Statistical Bulletin and National Bureau of Statistics (NBS). Data collected were analyzed using econometric techniques. The variables used were private domestic investment, budget deficit, recurrent and capital government expenditure, oil and non-oil government revenue and public debt. The main findings are: First, there is an evidence of a double threshold effects of the fiscal balance. When exceeding a budget deficit level of 3.98 per cent of GDP or a fiscal surplus level of 3.2 per cent of GDP, private investment is negatively affected. Also, increase in government total expenditure beyond the third regime made private investment to become less productive. As regards public debt, the results revealed that private investment had the most positive impact on economic growth in the first regime of public debt. A resort to public debt beyond this level will make private investment less productive thereby inhibiting growth. The study therefore, concludes that government should be cautious in resulting to debt instruments to finance its deficit. It should also make a concerted effort to increase its expenditure especially in the provision of infrastructural facilities as this directly influence private investment decision positively.

Multimodality of Tact Enactment to Stay Safe during the COVID-19 Pandemic-ridden Period

This paper examines drama of reality orchestrated on the heels of the outbreak of a pandemic known as CORONAVIRUS (COVID-19). The disease which erupted in China around December 2019 started killing in hundreds and thousands without any tested drug in sight to quell its furnace except precautionary measures like ‘social distancing’ ‘Hand wash with sanitizer’, ‘wearing of face mask’ and the like. Cases were purposely selected through the affordances of newspapers, recorded newscast, social media applications like WhatsApp, and You-tube. Multimodality as well as Tact Maxim was considered an apt theoretical framework to capture selected instances in the Nigerian situation owing to the exploitation of semiotics and other linguistic nuances involved in the data collection. The critical analysis of the drama revealed that the world had never been the same, and that in the aftermath of the COVID-19 pandemic, a new world-order was imminent ; just like it had happened after the historic 1720 , 1820, and 1920 occurrences. The pandemic period was therefore a show of insincerity in governance, ingratitude, display of abject poverty necessitating renewed dedication to salient essentials of life. The religious circle was not spared as adherents became wiser when the hitherto mammoth crowd as a show of affluence and generosity became replaced with defined gathering, The paper concluded on a note that it is time non-realistic and non-productive policies were jettisoned in order to forestall future re-occurrences of the pandemic. These, in the Nigerian situation should take the form of reducing the recurrent expenditure of the legislature, avoiding mono-economy and re-diversifying, redefining the essential and non-essential services, intensifying e-learning/banking, etc, curbing the excesses of law-enforcement agents and civilians alike. These would go a long way to better the lot of the masses, provided sincerity, transparency and accountability become the watch-word of governance.

Nexus between Inflation, Economic Growth and Government Expenditure of Nepal

In the context of Nepal, this study will explore the relationship between the rate of inflation, economic growth, and government spending. Government spending has been broken down in this analysis into three categories: government recurrent expenditure, government capital expenditure, and government financing expenditure. The time series data from 1974 to 2021 are used in the investigation. The econometrics tools used to analyze this link are the Granger-causality test, ARDL, Johansen co-integration, and the Augmented Dickey- Fuller (ADF) unit root test. The outcomes of using these econometric techniques reveal a long-term relationship between the rate of inflation, economic growth, and government spending, which indicates that public spending has beneficial externalities and links. In the short run, government spending has a greater impact on economic growth than the rate of inflation. The results of the causality test indicate that there is a one-way causal relationship between the rate of inflation and both economic growth and government spending.

Impact of Economic Recession on Funding of Business Education Programmes in Nigerian Universities: A Case Study of University of Benin

Education in Nigeria has been plagued by inadequate funding over the years. This has continued despite various interventions by successive administrations. The current economic recession in the country has further worsened the situation with its attendant consequences on the different sectors of the economy, which includes the university education subsector. In order to capture the challenges of economic recession, this paper undertook a historical survey of global economic recession and Nigeria and the impact on funding education especially, the university education subsector programmes with specific reference to business education programme of the Department of Vocational and Technical Education, University of Benin. It analyzes the budgetary allocation to the department in the last four years and determines the adequacy of the allocation to business education programme, in the face of inflationary trend in the recessed economy. Findings show that business education programme has been inadequately funded and that there has been neglect of infrastructure and the provision of teaching and learning facilities. The survey also unraveled the fact that budget was not allocated to training of needed manpower, as focus was on payment of salaries and purchase of consumables for the day to day running of the department. Recommendations have been made amongst which are: the need to improve internally generated revenue through entrepreneurship centres and the need for government to increase the budgetary allocation to the education sector to meet the recurrent and capital expenditure for implementation of business education programmes. Keywords: Economic Recession, Business Education, Funding of Business Education Programmes, Nigerian Universities, University of Benin

Fiscal policy, interest rate and the manufacturing sector performance in Nigeria

In this paper, the influence of fiscal policy (government expenditure and taxation) and interest rate on the manufacturing sector of the Nigerian economy was explored for the period 1981 to 2021. The study utilized the autoregressive distributed lag (ARDL) model approach since some of our variables were integrated at level and others at first difference, and the bounds test reporting the existence of long run relationship in the model. Findings of the study indicated that in the short run, government expenditure and its one-period lag exerted a negative and significant influence on manufacturing sector performance; value added tax exerted a positive and significant effect on manufacturing sector performance while its one-period lag exerted a negative and significant effect; and interest rate exerted a positive and significant effect on manufacturing sector performance. In the long run, government expenditure put forth a negative but insignificant effect on manufacturing sector performance; while value added tax and interest rate exert positive and significant effect. In the disaggregated model, recurrent expenditure exerts a negative and significant effect; capital expenditure exerted a positive and significant effect; value added tax exerted a negative and significant effect; and interest rate put forth a positive and significant influence on manufacturing sector performance. The study recommended that there is need for a reduction in the cost of governance as a huge proportion of public spending is used in running the government other than being utilized in stirring critical sectors that could stir manufacturing sector performance.

Expenditure Practices of Provincial and Local Governments: The Case of Nepal

Nepal promulgated a new constitution in 2015, which adopted a federal system of governance to achieve economic equality, prosperity and social justice. The constitution has allocated expenditure responsibilities to each level of government. In such a scenario, this study employs a descriptive approach to analyze the spending practices of Nepal’s provincial and local governments. Secondary sources of data were used to cover the period from 2018/19 to 2021/22. The study found that the average share of recurrent expenditure at the provincial level of Nepal was 42.5% while such share of capital expenditure was 57.5%. At the local level, the average share of recurrent and capital expenditure was 60.5% and 39.5% respectively. Within the capital expenditure of Nepal’s provincial governments, the average share of expenditure items having relatively more contribution to capital formation was 70.6% while that of local governments, such share was 52.9% only. The study also found that Nepal's provincial and local governments spend less on the major subnational service delivery areas. Nepal’s subnational government spending practices highlight the need to spend more on capital formation. Within the capital formation, more spending on the areas having a direct impact on their future growth and prosperity is necessary. The subnational governments must also spend more on major subnational service delivery areas.

Exploring Fiscal Federalism and the Structure of Public Spending in Nigeria

Globally, there has been a noticeable shift towards fiscal decentralization during the last few decades. As a result, subnational levels of government now have more latitude for revenue generation and spending decisions. Nations all around the world are recognizing the benefits of fiscal decentralization. Fiscal federalism, as a component of fiscal decentralization, deals with the public sector's vertical organization. It examines the functions of the various governmental tiers and their interactions with one another through various fiscal mechanisms. The study aims to investigate the impact of Nigeria's fiscal federalism on public spending and the welfare of its citizens. The Wiseman-Peacock theory was adopted as the theoretical framework. The study was based on a documentary research design. Content analysis was used as a method for analyzing data. The derived findings revealed that Nigeria’s revenue-to-GDP ratio is among the lowest in the world. It also established that revenue shortages have created imbalances in government expenditure, i.e., recurrent above capital expenditure. The study recommends that addressing loopholes in the current tax legal framework, allocating spending more efficiently, and strengthening institutions are approaches to be applied to put Nigeria on a sustainable fiscal path.

Human Capital Investment and Poverty Rate in Nigeria

This study examined the relationship between human capital investment and poverty rate in Nigeria. Human Capital Investment was proxied by capital expenditure on education, recurrent expenditure on education, capital expenditure on health, recurrent expenditure on health and tertiary enrolment, while poverty rate is measured using national poverty index. Relevant data were extracted from the annual Statistical Bulletin of the Central Bank of Nigeria. Unit root test was conducted using Augmented Dickey Fuller method which revealed that the variables were integrated at level and first difference necessitating the use of autoregressive distributive lag/bound test to explore the long run relationship existing among the variables in the model and the result showed that the variables were co-integrated; thus, depicting the presence of long run form. From the result of the various tests, it was revealed that there is a significant relationship between the proxies of human capital investment and poverty rate in Nigeria. The study consequently, concluded that human capital investment on education, health and tertiary enrolment significantly affects poverty rate in Nigeria. Based on the findings from the analysis, the study recommended amongst others, that; the government of should strive to increase investments in the areas of education and health so as to improve on the quality of education and healthcare facilities and as such, the quality of the human resources that could be instrumental to the achievement of desired economic growth, increasing the per capital income of citizens and reducing the poverty rate of the country; the reforms of the federal government of Nigeria relating to the education and health sectors of the economy as provided in the NEEDS document, should be sustained by the government with great commitment and will.