GOVERNMENT EXPENDITURE: A CATALYST FOR ECONOMIC GROWTH IN NIGERIA

Abstract

In the quest to unravel the intricate dynamics shaping Nigeria's economic trajectory, this study delves
into the relationship between capital expenditure and economic growth over a three-decade period,
spanning from 1992 to 2021. The ex-post facto research design was adopted, using historical data
extracted from Central Bank of Nigeria (CBN) statistical bulletins. Augmented Dickey Fuller (ADF)
unit root test was carried out to test for the stability of data. Co-integration test was done with Johansen
and Engle-Granger methods. Findings showed that, when lagged by one year, government expenditure
on education has a positive and insignificant relationship with gross domestic product. While
government expenditure on healthcare has a positive and significant relationship with the gross
domestic product; government expenditure on transportation has a negative and insignificant
relationship with the gross domestic product; and government expenditure on agriculture has a negative
and significant relationship with the gross domestic product. The study concluded that budgetary
allocation and implementation of expenditure on education, transport, and agriculture were not
properly allocated and utilized to improve the nation’s productive capacity. The study suggested that
the allocation and execution of budget to the identified critical sectors should be more done carefully
for accelerated economic growth.