Empirical Examination of the Effects of Government Spending on the GDP Growth Rates of Nigeria
Keywords:
Recurrent expenditure, capital expenditure, gross domestic product growth rateAbstract
This research work presents an empirical analysis of the impact of government spending on Nigerian economy. The research work made use of secondary data collected from Central Bank of Nigeria’s Statistical Bulletin of various issues and National Bureau of Statistics. The empirical measurement covers the period between 2000 and 2016. An Ordinary Least Square (OLS), Augmented Dickey-Fuller unit root test and Co-integration test were adopted to carry out an extensive analysis of the adopted variables which include Gross Domestic Product growth rate, recurrent expenditure and Capital expenditure. The result revealed that the variables have significant effect in the positive direction. This implies that as recurrent expenditure increases, the growth rate of the economy decreases. An increase in the capital expenditure also causes a positive influence on the Nigeria economy within the period considered. The following recommendations were made: That sine recurrent expenditure can still thrive amidst corruptions and embezzlements, government spending should be properly managed so as to raise the nation’s production capacity and employment, which in turn will increase economic growth in Nigeria. It was also recommended that in order that government can increase its capital expenditure especially on rural roads and electricity government should promote efficiency in the allocation of development resources through emphasis on private sector participation and privatization\commercialization. Besides, independence of Anti-graft or anti-corruption agencies should not be a negotiable phenomenon to enable the outfits curb the menaces of corruption and embezzlements in the system especially during budget preparation and implementations. They should be made to examine the lapses in embezzlement level of our past leaders in terms of budgetary inflation; correctness of proper imputation and computation of the monetary figures as well as checkmating the past wrong manipulation so as to correct it for future purposes.
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