GOVERNMENT EXPENDITURE AND ECONOMIC DEVELOPMENT: EVIDENCE FROM NIGERIA

  • Bieh Nancy Barilee Department of Accounting, Faculty of Management Sciences, University of Port Harcourt, Choba, Rivers State, Nigeria.
  • Micah LeyiraChristain Department of Accounting, Faculty of Management Sciences, University of Port Harcourt, Choba, Rivers State, Nigeria.
Keywords: GOVERNMENT EXPENDITURE, ECONOMIC DEVELOPMENT, EVIDENCE FROM NIGERIA

Abstract

This empirical research assesses the relationship between Federal Government expenditure and economic development in Nigeria. The sources of analytical data include the Central Bank of Nigeria Statistical Bulletin and the United Nations Development Programme. The study employs the Augmented Dickey-Fuller unit root test method. The stationary series are subjected to a long-run cointegrating test using Engle-Granger residual-based technique. Findings show no long-run cointegrating relationship between government recurrent expenditure components and per capita income. However, the Ordinary Least Square methodology provides insightful short-run findings indicating a negative and insignificant relationship between expenditure in education and per capita income. Expenditure in health was positive and significant as a relationship to per capita income. We conclude that recurrent expenditure of the government does not meaningfully support development beyond the short run. Although Keynesian theory defends government economic involvement expenditure, however when spending head such as education is critically examined, education expenditure does not support per capita income.   It is evident in this regard that health is a key sector and its operation is of significant advantage to economic development in the country. The evidence renders valid the theoretical views of Rostow and Musgrave. It was recommended that education expenditure should be revisited by the budget office or Authority to Incur Expenditure (AIE) department of the government. It is important that funds appropriated for educational spending be honestly expended. Alternatively, the economy manages should devote more resources to education.

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Published
2021-12-14
How to Cite
Barilee, B. N., & LeyiraChristain, M. (2021). GOVERNMENT EXPENDITURE AND ECONOMIC DEVELOPMENT: EVIDENCE FROM NIGERIA. GPH-International Journal of Social Science and Humanities Research, 4(08), 40-58. https://doi.org/10.5281/zenodo.6966454