Public Sector Human and Material Capital Investments in Nigeria’s Economic Growth Process: Evidence and Insights



Motivated by the need to ascertain the nature of predictive relationships between government capital expenditures (human and material) and economic growth in Nigeria, this study employs secondary data sourced from Central Bank of Nigeria's Statistical Bulletin over the period 1981 to 2016 (36 years). Statistical techniques employed include Stationarity, Multiple Regression (OLS), Johansen's Co-integration, Error Correction and Granger Causality tests to evaluate the nature of short and long-run relationships that prevail, as well as the extent to which the variables of study do promote themselves in the growth process. Both the short-run (multiple regression) and long run (Error Correction) analyses confirm significant sensitivities and long run relationships between Nigeria’s GDP and public sector material and human capital investments. However, the Granger Causality results provide substantial evidence to assert the prevalence of a significant disconnect between government's material and human capital expenditures and economic growth as they all fail to promote one another. Accordingly, the study concludes that governments' planned expenditures are not in-tandem with the nation's economic growth in Nigeria. Consequently, the study recommends that to achieve a greater level of coherence in Nigeria's government expenditures, the following measures need to be taken; (i) Successive administrations must incorporate all previous and uncompleted projects by previous regimes in their current plans for execution in order to minimize large scale prevalence of white elephant projects (uncompleted and abandoned projects) by successive regimes. (ii) Policy summersaults and inconsistencies must hence forth, be avoided by successive governments in Nigeria (iii) Strict adherence to budgetary and fiscal discipline as well as consistency of timing of commencement of annual budget implementations must prevail to avert further wastes in values of public funds and programmes.

Keywords: Human Capital Investment, Material Capital Investment, Public Sector, Economic Growth.

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