Government Expenditure and Economic Growth in Nigeria

Abstract

The study ascertained the effect of government expenditure on the economic growth of Nigeria. Specifically, the study assessed the effect of government capital expenditure, government recurrent expenditure and total government expenditure on the real gross domestic product of Nigeria. This study adopted an ex-post-facto research design. The data required for this study were collected from secondary sources, primarily from the Central Bank of Nigeria (CBN) Statistical Bulletin, and the National Bureau of Statistics (NBS). The key variables for which data were collected include government capital expenditure, government recurrent expenditure, and the real GDP of Nigeria. This study relies on time-series data covering the period from 1999 to 2023. Descriptive statistics was employed to summarize the key characteristics of the data. The primary method of test of hypotheses was the Ordinary Least Squares (OLS) regression technique. The study found that: government capital expenditure has a negative but non-significant effect on the real GDP of Nigeria, government recurrent expenditure has a positive but non-significant effect on the real GDP of Nigeria, total government expenditure has a positive and non-significant effect on the real GDP of Nigeria. In conclusion, the current structure or implementation of government spending may not be effectively aligned with mechanisms that drive sustained economic output. The study recommends that the Federal Ministry of Finance, Budget and National Planning should improve the planning, execution, and monitoring of capital projects to ensure that funds allocated for infrastructure and development projects are efficiently utilized and produce measurable economic impact.