SOURCE:

Faculty: Management Sciences
Department: Banking And Finance

CONTRIBUTORS:

Agunuwa, E. V.
Ibenta, S. N. O.

ABSTRACT:

The focus of this study is to empirically investigate the impact of government sectoral expenditure on the level of economic growth in Nigeria. It examined the level of government expenditure on some selected sectors and its effect on the level of economic growth in Nigeria. The sectors and subsectors examined include the solid minerals, the oil refineries, health, electricity and the education sectors. The study covered the period between 1980 and 2013. This period is significant because it covered the period of major development plans or economic policies on government expenditure, such as the Pre-Structural Adjustment Programme (Pre - SAP), SAP and Post SAP periods which include the National Economic Empowerment and Development Strategies (NEEDS) era. This period witnessed major reforms in government expenditure plan and a major transformation and increase as well as diversity in government expenditure. The study collected and made use of secondary data based on the World Bank Development Indicators for Nigeria for the period under review. The Cointegration and its implied Error Correction Model (ECM) was used for the analysis. This include the estimation of overparameterized and parsimonious ECM models. The result of the parsimonious model was used to test the hypotheses. The result shows that government expenditure on Solid Mineral, Oil Refineries, Health, Electricity and Education had a significant and positive effect on the level of economic growth in Nigeria for the period under review. This is an indication that these sectors and subsectors, if well funded and properly managed, have the potentials to increase the level of economic growth in Nigeria. On the basis of the above findings, the study thus recommends amongst others increased government budgetary allocation to the Solid Mineral, Oil Refineries, Health, Electricity and Education including other key sectors and subsectors of the economy and that how these expenditures are managed should be properly monitored.