Government Expenditure and Economic Development in Nigeria: A Disaggregated Approach.

Abstract:

This study evaluated government expenditure and economic development in Nigeria: A disaggregated approach using time series data of 34 years (1990-2023). The variables used for the study includes government spending on education, government spending on health, and government spending on agriculture as the independent variables and GDP per capita as the dependent variable. Three objectives were formulated for the study and three hypotheses were also prepared in line with the objectives. Ex-post-facto research design was employed, and the time series data was generated and analysed using regression analysis, Autoregressive Distributed Lagged (ARDL) testing technique and unit root test, to examine the long run causal effect relationship that exist between government expenditure and economic development in Nigeria. The study finds that government spending on education has a significant positive effect on GDP per capita, with an unstandardized coefficient of 0.186 and a p-value of 0.031. Conversely, government expenditure on health showed an insignificant positive impact, with an unstandardized coefficient of 0.062 and a p-value of 0.455. Government spending on agriculture was found to have a negative effect, but it was not statistically significant, with an unstandardized negative coefficient of 0.031 and a p-value of 0.403. The regression model explained approximately 99.5% of the variation in GDP per capita (R² = 0.995), indicated a strong relationship between government spending and economic development. The results concluded that increased investments in education, coupled with reforms in health and agricultural policies, are essential for promoting long-term economic development in Nigeria. Based on these findings, the study recommended prioritizing education, improving health expenditure efficiency, enhancing agricultural policies, and ensuring effective resource allocation to maximize the potential of government spending in economic development.