Sectoral Spreads of Government Expenditures and Economic Growth in Nigeria (1980-2017): An Approach of Error Correction Model

Abstract

The study intended to ascertain impact of sectoral spreads of government expenditure on economic growth in Nigeria. The specific objectives are to: examine the impact of sectoral government expenditure on economic growth in Nigeria and ascertain if there is long-term relationship between sectoral government spending and economic growth in Nigeria. The study made use of expost-facto research design which enables us to measure the effect or relationship between dependence variable and explanatory variables using time-series secondary data from 1980 to 2017. The data were subjected to Unit Root, Johansen Cointegration, and Error Correction test and Durbin-watson test. The study concluded that there was positive impact of sectoral spreads of government expenditure on economic performance in Nigeria. Three variables on sectoral Government expenditure among five sectoral Government expenditure variables have long-run relationship with real GDP. This study’s conclusion confirmed wagner’s law that increase in economic growth was achieved as a result of increase in Government expenditure. The study verified that Government expenditure on Agriculture and Defence have statistical significant effect on economic performance in Nigeria while Government expenditure in transportation and communication, health and education were not statistical significant. Based on above stated findings, the study made the following recommendations: Political officeholders and public officeholders should first have political will to turn Nigeria into developed country through accountability and transparency act in the use of public fund. Nigeria government should promulgate more anti-corruption agencies to speed-up prosecution and execution of judgment on public fund looters.