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Responsiveness of Economic Growth to Public Expenditure in Nigeria (1980 -2016): An Empirical Analysis

Author

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  • Sebastian O. Uremadu*

    (Department of Banking and Finance, College of Management Sciences (COLMAS) Michael Okpara University of Agriculture, Umudike Umuahia, Abia State, Nigeria)

  • Nwaeze Chinweoke

    (Department of Banking and Finance, College of Management Sciences (COLMAS), Michael Okpara University of Agriculture, Umudike Umuahia, Abia State, Nigeria)

Abstract

This paper examined responsiveness of economic growth to public expenditure in Nigeria for the period 1980 – 2016. Data were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin Data and the study employed Ordinary Least Square (OLS) multiple regression technique for its tests and analysis. The findings of the study revealed that government recurrent expenditure had an insignificant negative impact on economic growth in Nigeria while government capital expenditure exerted a positive significant impact on economic growth for the period covered by the study. However, domestic inflation rate had the greatest but negative influence on growth of the economy. The study recommended amongst others that the government sector should revert to a lower level of spending as well as plug all extravagant recurrent spending in order to reduce wastages and make recurrent spending of government contribute meaningfully to economic growth in Nigeria. Further, government capital expenditure should be directed majorly to the productive sectors of the economy such as agriculture, industry, education as well as to infrastructural development as this will go a long way in increasing the pace and level of economic activities in the country which would help to achieve an enhanced economic growth in Nigeria in the coming years. Effort should equally be directed on moderating domestic inflation rate towards achieving stable growth of the economy.

Suggested Citation

  • Sebastian O. Uremadu* & Nwaeze Chinweoke, 2019. "Responsiveness of Economic Growth to Public Expenditure in Nigeria (1980 -2016): An Empirical Analysis," Sumerianz Journal of Business Management and Marketing, Sumerianz Publication, vol. 2(2), pages 19-31, 02-2019.
    • Handle: RePEc:sum:sjbmms:2019:p:19-31
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    References listed on IDEAS

    as
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