Sectorial Analysis of Public Expenditure and Economic Growth In Nigeria: 1982 – 2012

Abstract

This study examined the sectorial analysis of public expenditure and economic growth in Nigeria. It employed ordinary least square approach as technique of analysis with time series data for the period 1982-2012. The variables were tested to determine their level of stationarity using Augmented Dickey Fuller (ADF) and Phillip-Perron. The series were found to be stationary. The results of the Co integration indicate that the hypothesis of non Co integration is rejected. The result of the Johansen Co integration test indicates three co integration equation at 5% level of significance and one co integration equation at 1% level of significance. The granger Causality test indicates both uni-causal and bi-causal relationship among variables. Two models were estimated and the results shows that agriculture, health, defense, transportation are positive and statistically significant determinants of economic growth in Nigeria at 5% percent level of significance.  However, expenditure on education is negative and not significant. The result shows that Wagner’s hypothesis does not hold in some of the variables In our estimated model and also invalidates Keynesian Paradigm of increase government expenditure. In Nigeria, Public Sector spending has been on the increase due to government commitment to Finance infrastructure, Civil Service and other reform programmes that cut across Ministries, Departments and Agencies (MDA’s) and the structure of Nigeria public expenditure is broadly categorized into capital and recurrent expenditure. The size, structure and quality of public expenditure determine the pattern and form of growth in output of the economy. Therefore, the study recommend, for government to improve in her use of resources, issues of corruption, inefficiency and wastages must be addressed. There should be effective channeling of public funds to the provision of infrastructure especially education, health, power, transportation and defense that enhance welfare and productive activities.

Key words: Government expenditure, Economic growth, Economic development, infrastructure and GDP.