Government Expenditures and Economic Growth: The Nigerian Experience

Abstract

The paper investigates the empirical relationship between government expenditure and economic growth. Government expenditure was disaggregated unto, total expenditure, public debt expenditure, expenditure on health and government expenditure on Education. The ordinary least square (OLS) was applied to ascertain the short-run relationship between variables, however, the Augmented Dickey Fuller (ADF) test, was used to examine long-run relationship between variables in the equation. Results of the test show that there is an inverse relationship between government expenditures on health and economic growth; while government expenditure on education sector, is seen to be insufficient to cater for the expending sector in Nigeria. It was also discovered that government expenditure in Nigeria could increase foreign and local investments. The paper recommended that government should spend more on key macro-variables, such as health, infrastructure, power, etc. This it is believed that judicious expenditure of government, will power the transformation agenda of government as well as engender growth in the Nigerian economy.

DOI: 10.5901/mjss.2014.v5n10p89