Empirical Examination of the Effects of Government Spending on the GDP Growth Rates of Nigeria


  • Professor Ocheni S.I. Faculty of Management Science Kogi State University, Anyigba, Nigeria


Recurrent expenditure, capital expenditure, gross domestic product growth rate


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.


Akpan, N. I. (2005). Government Expenditure and Economic Growth in Nigeria, A Disaggregated Approach. Central Bank of Nigeria Financial Review, 43(1).

Bishop, M. (2012). Economics A-Z terms beginning with T;transfer. The Economist. Retrieved March 11, 2018

Bol, V. D., & Willy, M. M. (2016). The relationship between public expenditure and economic growth in South Sudan. International Journal of Economics, commerce and Management, 4(6), 235-259.

Chioma, D. O., Eze, E. C., & Chukwuani, V. N. (2016). Analysis of the relationship between public expenditure and national income in Nigeria. IDOSR Journal of Scientific Research, 1(1), 81-95.

Cooray, A. (2009). Government Expenditure, Governance and Economic Growth. Comparative Economic Studies, 51(3), 401-418.

Emmanuel, C. M., Pius, C., & Greenwell, M. (2013). Impact of government sectoral expenditure on economic growth in Malawi. Journal of Economics and Sustainable Development, 4(2), 71-78.

Ighodaro, C., & Okiakhi, D. (2010). Does the Relationship Between Government Expenditure and Economic Growth Follow Wagner’s Law in Nigeria? Annals of University of Petrosani Economics, 10(2), 185-198.

Koffi, Y. (2017). Public expenditure, private investment and economic growth in Togo. Scientific Research Publishing, 7, 193-209.

Komain, J., & Brahmasrene, T. (2007). The Relationship between Government Expenditures and Economic Growth in Thailand. Journal of Economics and Economic Education Research.

Loizides, J., & Vamvoukas, G. (2005). Government Expenditure and Economic Growth: Evidence from Trivariate Causality Testing. Journal of Applied Economics, 8(1), 125-152.

Maku, O. E. (2014). Public Expenditure and Economic Growth Nexus in Nigeria: A Time Series Analysis. Public Policy and Administration Research, 4(7).

Miftahu, I., & Rosni, B. (2017). Public sector spending and economic growth in Nigeria. Asian Research Journal on Arts and Social Sciences, 3(2), 1-19.

Nworji, I. D., Okwu, A. T., Obiwuru, T. C., & Nworji, L. O. (2012). Effects Of Public Expenditure On Economic Growth In Nigeria: A Disaggregated Time Series Analysis. International Journal of Management Sciences and Business Research, 1(7).

Odo, S. I., Igberi, C. O., Udude, C. C., & Chukwu, B. C. (2016). Public expenditure and economic growth in South Africa. Asian Journal of Economics, Business and Accounting, 1(2), 1-17.

Ogunmuyiwa, M. S., & Adelowokan, O. A. (2015). Measuring the impact of public expenditure on economic growth in Nigeria. Journal of Social Sciences Studies, 2(2), 46-55.

Ranjan, K. D., & Sharma, C. (2008). Government Expenditure and Economic Growth: Evidence from India. The ICFAI University Journal of Public Finance, 6(3), 60-69.

Udoffia, D., & Godson, J. R. (2016). The impact of federal government expenditure on economic growth in Nigeria. Greener Journal of Social Sciences, 6(4), 92-105.

Usman, A., Mobolaji, H. I., Kilishi, A. A., A., Y. M., & Yakubu, T. A. (2011). Public expenditure and economic growth in Nigeria. Asian Economics and Financial review, 1(3), 104-113.

Wagner, A. (1883). Three Extracts on Public Finance. In Translated and reprinted in R.A. Musgrave and A.T. Peacock (eds), Classics in the Theory of Public Finance. London: Macmillan, 1958.




How to Cite

Professor Ocheni S.I. (2021). Empirical Examination of the Effects of Government Spending on the GDP Growth Rates of Nigeria. Indian Journal of Commerce and Management Studies, 9(3), 26–31. Retrieved from https://ijcms.in/index.php/ijcms/article/view/118