Ekpo, Udo N. (2021) Public Expenditure, Official Development Assistant and Economic Growth: A Time Series Analysis for Nigeria (1981 - 2018. International Journal of Development and Economic Sustainability, 9 (3). pp. 72-90. ISSN 2053-2199 (Print), 2053-2202(Online)
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Abstract
In addition to divergent views of economists on the effect of public expenditure on economic growth, results of existing empirical studies in developed and developing economies has remained inconclusive and tends to depend on the period of study, econometric method, nature of data and the composition of government expenditure. In this study, public expenditure in Nigeria is decomposed into domestic and the foreign receipts components. The domestic component comprises capital expenditure (GCE) and recurrent expenditure (GRE) while the foreign receipts component captures foreign inflow of official development assistance (ODA). Employing extended aggregate production function framework and bound test approach (ARDL model), this study examined the impact of each of these three components of public expenditure (GCE, GRE and ODA) on economic growth in Nigeria for the period (1981- 2018). The findings of this study indicate the existence of a long run relationship between the macroeconomic variables estimated in the model. The recurrent expenditure (GRE) has positive impact on economic growth both in the short-run and in the long-run, countering the widely held view that government consumption spending is growth-reducing. The capital expenditure (GCE) and official development assistance (ODA) have negative impact on economic growth in Nigeria both in the short-run and long-run. The granger causality test result shows no causal relationship between GDP and GCE and between GDP and ODA, but a bi-directional causal relationship exists between GDP and GRE. It is recommended that greater percentage of public fund should be expended as capital expenditure and such fund should be properly utilized on acquisition of physical capital and social overhead capital like transportation, electricity, communication, irrigation, flood control, research and human capital development, capital formation in agricultural and industrial sectors to enhance the productive capacity of the economy. ODA in recent times has been unreliable source of finance in Less Developed countries, hence Nigeria should not heavily depend on it. However, whatever ODA is received should be properly utilized and channel into productive projects which have significant positive impact on economic activities and wellbeing of the populace. The fight against corruption in the country should be frontally confronted to free more public fund for collective development purposes in the country.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | public expenditure, official development assistance, capital expenditure, recurrent expenditure, economic growth, Nigeria. |
| Subjects: | H Social Sciences > H Social Sciences (General) |
| Depositing User: | Professor Mark T. Owen |
| Date Deposited: | 01 Apr 2022 14:34 |
| Last Modified: | 01 Apr 2022 14:34 |
| URI: | https://tudr.org/id/eprint/201 |
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