IDEAS home Printed from https://ideas.repec.org/a/spr/snbeco/v1y2021i9d10.1007_s43546-021-00118-w.html
   My bibliography  Save this article

Effectiveness of fiscal federalism for poverty reduction in Nigeria: an analysis of federal and state governments’ expenditures

Author

Listed:
  • Megbowon Ebenezer

    (North-West University)

  • Aderoju Samuel

    (Kwara State University)

  • Gbenga Peter Sanusi

    (Anchor University)

Abstract

One of the sustained political and economic strategies that have been adopted by various countries over 3 decades to achieve the desired level of development is fiscal federalism. Through this economic development strategy, various levels of government within an economy have been involved in the pursuit of reducing poverty overtime. The purpose of this study is to examine the relationship between government expenditure on poverty reduction with respect to federal and state government expenditures, respectively. The study employed the auto-regressive distributed lag (ARDL) estimation technique to establish long-run relationship, and to examine the magnitude of the effect of federal and state government expenditures in both the short-run and long-run periods using time-series data for the period 1981–2018. Results obtained indicate that only state government expenditure has positive effect on poverty reduction in Nigeria. The findings of this study, therefore, support the need for greater decentralization and increase in fiscal expenditure responsibilities and strengthening revenue capability in favor of state governments, giving that achieving desired poverty reduction could be achieved through increased state government spending on developmental projects.

Suggested Citation

  • Megbowon Ebenezer & Aderoju Samuel & Gbenga Peter Sanusi, 2021. "Effectiveness of fiscal federalism for poverty reduction in Nigeria: an analysis of federal and state governments’ expenditures," SN Business & Economics, Springer, vol. 1(9), pages 1-19, September.
    • Handle: RePEc:spr:snbeco:v:1:y:2021:i:9:d:10.1007_s43546-021-00118-w
    DOI: 10.1007/s43546-021-00118-w
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s43546-021-00118-w
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s43546-021-00118-w?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Liangliang Liu & Donghong Ding & Jun He, 2019. "The welfare effects of fiscal decentralization: a simple model and evidence from China," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(1), pages 417-434, January.
    2. Syed Ammad Ali & Hasan Raza & Muhammad Umair Yousuf, 2012. "The Role of Fiscal Policy in Human Development: The Pakistan’s Perspective," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 51(4), pages 381-396.
    3. Williams Agyemang-Duah & Evans Kafui Gbedoho & Prince Peprah & Francis Arthur & Augustus Kweku Sobeng & Joshua Okyere & Jennifer Mengba Dokbila, 2018. "Reducing poverty through fiscal decentralization in Ghana and beyond: A review," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1476035-147, January.
    4. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    5. de Mello, Luiz R, Jr, 1999. "Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 133-151, January.
    6. Nasreddine Kaidi & Sami Mensi, 2020. "Financial Development, Income Inequality, and Poverty Reduction: Democratic Versus Autocratic Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(4), pages 1358-1381, December.
    7. Mohammad Imdadul Haque & Md Riyazuddin Khan, 2019. "Role of Oil Production and Government Expenditure in Improving Human Development Index: Evidence from Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(2), pages 251-256.
    8. Ferdi Celikay & Erdal Gumus, 2017. "The effect of social spending on reducing poverty," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 44(5), pages 620-632, May.
    9. Rashid Mehmood & Sara Sadiq, 2010. "Impact of Fiscal Decentralisation on Human Development: A Case Study of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 513-530.
    10. Chong Siew Huay & Jonathan Winterton & Yasmin Bani & Bolaji Tunde Matemilola, 2019. "Do remittances promote human development? Empirical evidence from developing countries," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 46(10), pages 1173-1185, October.
    11. Chao-Hsi Huang & Kai-Fang Teng & Pan-Long Tsai, 2010. "Inward and outward foreign direct investment and poverty: East Asia vs. Latin America," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(4), pages 763-779, December.
    12. Haydar Demirhan, 2020. "dLagM: An R package for distributed lag models and ARDL bounds testing," PLOS ONE, Public Library of Science, vol. 15(2), pages 1-23, February.
    13. Novignon, Jacob & Lawanson, Akanni, 2014. "Efficiency of health systems in sub-Sahara Africa: a comparative analysis of time varying stochastic frontier models," MPRA Paper 56897, University Library of Munich, Germany.
    14. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    15. Juliana Yael Milovich, 2018. "Does Aid Reduce Poverty?," OPHI Working Papers 122, Queen Elizabeth House, University of Oxford.
    16. Nicholas M. Odhiambo, 2010. "Is financial development a spur to poverty reduction? Kenya's experience," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 37(3), pages 343-353, August.
    17. Juliana Yael Milovich, 2018. "Does Aid Reduce Poverty?," OPHI Working Papers ophiwp122.pdf, Queen Elizabeth House, University of Oxford.
    18. Sehrish Shahzad & Bushra Yasmin, 2016. "Does Fiscal Decentralisation Matter for Poverty and Income Inequality in Pakistan?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 781-802.
    19. Babajide Fowowe & Mohammed Shuaibu, 2014. "Is foreign direct investment good for the poor? New evidence from African countries," Economic Change and Restructuring, Springer, vol. 47(4), pages 321-339, November.
    20. Friday Osemenshan Anetor & Ebes Esho & Grietjie Verhoef & Christian Nsiah, 2020. "The impact of foreign direct investment, foreign aid and trade on poverty reduction: Evidence from Sub-Saharan African countries," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1737347-173, January.
    21. Tebogo J. Moche & Nara Monkam & Goodness C. Aye, 2013. "Fiscal Decentralisation and Poverty in South Africa: Evidence from Panel Data Analysis," Working Papers 201378, University of Pretoria, Department of Economics.
    22. Yaya Keho, 2019. "Dynamic Relationship between Government Spending and Private Consumption: Evidence from Cote d'Ivoire," International Journal of Economics and Financial Issues, Econjournals, vol. 9(1), pages 197-202.
    23. Md Abdullah Omar & Kazuo Inaba, 2020. "Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-25, December.
    24. Fayyaz Ahmad & Muhammad Umar Draz & Lijuan Su & Ilhan Ozturk & Abdul Rauf & Shahid Ali, 2019. "Impact of FDI Inflows on Poverty Reduction in the ASEAN and SAARC Economies," Sustainability, MDPI, vol. 11(9), pages 1-24, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    2. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    3. MT Musakwa & N.M. Odhiambo, 2021. "The Impact of Foreign Capital Inflows on Poverty in Vietnam: An Empirical Investigation," Working Papers AESRI-2021-10, African Economic and Social Research Institute (AESRI), revised Oct 2021.
    4. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    5. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    6. Magombeyi, Mercy Tsitsi & Odhiambo, Nicholas Mbaya, 2017. "Dynamic impact of FDI inflows on poverty reduction:Empirical evidence from South Africa," Working Papers 22006, University of South Africa, Department of Economics.
    7. Megbowon Ebenezer T. & Mukarumbwa Peter & Ojo Oloruntimilehin S. & Ojeyinka Titus A., 2023. "Does Urbanization Matter For Poverty Reduction in Nigeria: An Empirical Evidence From Autoregressive Distributed Lag (ARDL) Estimation," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 33(3), pages 1-20, September.
    8. James Temitope Dada & Taiwo Akinlo, 2021. "Foreign direct investment and poverty reduction in sub-Saharan Africa: does environmental degradation matter?," Future Business Journal, Springer, vol. 7(1), pages 1-10, December.
    9. M. T. Magombeyi & N. M. Odhiambo, 2017. "Does Foreign Direct Investment Reduce Poverty? Empirical Evidence From Tanzania," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 67(2), pages 101-116, April-Jun.
    10. Fagbemi, Fisayo & Olufolahan, Toyin, 2019. "Capital inflows, financial development and poverty reduction in Nigeria," MPRA Paper 112784, University Library of Munich, Germany, revised 04 Apr 2019.
    11. Stéphane Mbiankeu Nguea & Issidor Noumba & Armand Gilbert Noula, 2020. "Does Foreign Direct Investment Contribute to Poverty Reduction in Cameroon? An ARDL-Bounds Testing Approach," Working Papers halshs-02570072, HAL.
    12. Sabrine Dhahri & Anis Omri, 2020. "Are international capital flows really matter for achieving SDGs 1 and 2: ending poverty and hunger?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(4), pages 731-767, November.
    13. Magombeyi, Mercy T & Odhiambo, Nicholas M, 2017. "Does foreign investment reduce poverty? Empirical evidence from Tanzania," Working Papers 22562, University of South Africa, Department of Economics.
    14. Acheampong, Alex O. & Appiah-Otoo, Isaac & Dzator, Janet & Agyemang, Kwabena Koforobour, 2021. "Remittances, financial development and poverty reduction in Sub-Saharan Africa: Implications for post-COVID-19 macroeconomic policies," Journal of Policy Modeling, Elsevier, vol. 43(6), pages 1365-1387.
    15. M. T. Magombeyi & N. M. Odhiambo, 2018. "FDI inflows and poverty reduction in Botswana: an empirical investigation," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1480302-148, January.
    16. Emeka Nkoro & Aham Kelvin Uko, 2023. "Foreign Direct Investment in the Quest for Poverty Reduction in Nigeria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 109-125.
    17. Magombeyi Mercy. T. & Odhiambo Nicholas M., 2017. "Foreign Direct Investment And Poverty Reduction," Comparative Economic Research, Sciendo, vol. 20(2), pages 73-89, June.
    18. Samad, Abdul & Masih, Mansur, 2018. "Does institutional quality matter in attracting foreign direct investment? the case of Ethiopia based on ARDL approach," MPRA Paper 108493, University Library of Munich, Germany.
    19. Pablo Quinonez & Joselin Saenz & Jessica Solorzano, 2018. "Does foreign direct investment reduce poverty? The case of Latin America in the twenty-first century," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(3), pages 488-500, June.
    20. Mohammad Imdadul Haque, 2019. "Growth Accounting for Saudi Arabia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(6), pages 691-701, June.

    More about this item

    Keywords

    Poverty reduction; Government expenditure; Fiscal decentralization; ARDL; Nigeria;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:snbeco:v:1:y:2021:i:9:d:10.1007_s43546-021-00118-w. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.