THE IMPACT OF GOVERNMENT CAPITAL EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA

Authors: Olaiya, Adeniyi Clement Ph.D & Ajayi, Oluwaseyi Moses Ph.D

ABSTRACT

This study examined the impact of government capital expenditure on economic growth in Nigeria. The study proxied the independent variable with three variables namely; government capital expenditure on health, government capital expenditure on education and government capital expenditure on agriculture while the dependent variable was proxied with gross domestic product. The data used were secondary time series data for the period 1999 to 2024. The data were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin. Augmented Dickey Fuller was used to test the stationarity of the variables, and auto-regressive distributed lag was used as the main estimation method, while the Breusch-Godfrey Serial Correlation LM Test, Breusch-Pagan-Godfrey for heteroscedasticity, and Jarque-Bera were used to verify the residual regression. The findings revealed that not all government expenditure components have the same effect on economic growth. While spending on education and health are statistically significant, government expenditure to agriculture was insignificant. This suggests government expenditure to education is beneficial than others, while the negative impact from health spending and the insignificant effect from agricultural spending suggest potential inefficiencies or misallocation of resources in those sectors. Therefore, the study concluded that government capital expenditures has a significant impact on economic growth in Nigeria within the periods under review. Therefore, the study recommended that governments should put in place control measures to ensure funds allocated and approved for agricultural purposes are not diverted to other purposes.

Keywords: Government, Expenditure, Education, Agriculture, Economic Growth

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