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Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 04 Issue 08

August 2018

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 17

Impact of Government Expenditure on

Economic Growth in Nigeria (1987-2017)

Ven. Dr. Joshua K. Joshua Onuora

B.SC,M.SC, Ph.D

joshuaonuora@gmail.com

Chukwuemeka Odumegwu Ojukwu University, Igbariam Anambra State Nigeria

Mrs Nwobodo Azuka Tina

B.Sc, MBA, M.Sc,

azukatina2015@gmail.com

Chukwuemeka Odumegwu Ojukwu University, Igbariam Anambra State Nigeria

ABSTRACT

The main objective of the study is to investigate the impact of government expenditure on

economic growth in Nigeria. The variables of capital expenditure on road, capital expenditure

on agriculture, recurrent expenditure were regressed on the economic growth in Nigeria over

the period of 1987 to 2017. The data will be analyzed with econometric techniques involving

Augmented Dicker Fuller and Philip Perron tests for unit roots, Johansson technique for

cointegration test for long run relationship and the ordinary least square (OLS). The result of the

study indicates that Capital expenditure on road and capital expenditure on agriculture have

positive impact on economic growth while recurrent expenditure had a negative impact on

economic growth. The Adjusted R-squared is 0.735801 which means that 74% of total variation

in gross domestic product (RGDP) can be explained by the variables, namely CER, CEA, and

RCE while the remaining 26% is due to other stochastic variables. The study thus concludes that

government expenditure has positive effect on economic growth of Nigeria and has helped to

improve Nigeria’s economic growth. Among the recommendations is that the Nigeria

government should commit her public expenditure on priority projects that are capable of

generating income that will not only produce servicing plat form but will also improve the

economic growth product in Nigeria.

INTRODUCTION

1.1 Background to the study

The volume of government expenditure has

been on increase in Nigeria if not almost all

countries of the world, because of the

continuous expansion in the activities of the

state and other public bodies on several

fronts. Since the twentieth century, the

developments of the functions of the state in

social matters such as education, public

health, commercial and industrial

undertakings and so on, has increased public