PUBLIC EXPENDITURE AND ECONOMIC GROWTH OF NIGERIA

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ABSTRACT

The study examined the impact of public expenditure on economic growth of Nigeria for the period 1980-2019.  Data were sourced from the Central Bank of Nigeria statistical Bulletin.  Real gross domestic product proxy for economic growth was adopted as the dependent variable while government recurrent expenditure on administration, education, health, economic services, transfers as well as government capital expenditure on social and community services and economic services were the independent variables.  The Augmented Dickey-Fuller unit root test was employed to test the stationarity of the variables.  The Johansen Co-integration test was also carried ot to test the long-run relationship of the variables.  The result showed that there existed a long-run relationship among the variables in the study.  The Vector error correction model was also adopted in data analysis.  The empirical results showed that recurrent expenditures on administration had a negative and significant impact on economic growth in Nigerian in both the long-run and short-run; recurrent expenditures on education had positive and significant impact on economic growth in the long-run and a positive and insignificant impact on the short-run; recurrent expenditures on health had a positive and significant impact on economic growth in the long-run but a positive and insignificant impact in the short-run; recurrent expenditure on economic services had positive and significant impact on economic growth in the long run and short-run; recurrent expenditures on transfers had positive and significant impact on economic growth in the long-run but a negative and significant impact in the short-run; capital expenditure on social and community services had a negative and significant impact on economic growth in the long-run and short-run and lastly, capital expenditure on economic services had a positive and significant impact on economic growth in` the long-run but a positive and insignificant impact in the short-run.  The study therefore recommended, amongst others, that government should increase its expenditure on administration especially in the area of security and internal defense and utilize them effectively and efficiently in order to improve the enabling environment on which Nigerians carryout their daily activities; government should adequately fund the educational and health sectors of the economy and at the same time ensure effective utilization of funds in these sectors to improve the welfare and productivity of their workforce, thus encouraging growth of the economy.  These measures would adequately enhance economic activities of Nigeria which would in turn, induce growth in the Nigerian economy.




TABLE OF CONTENTS

Cover Page                                                                                                     i

Title Page                                                                                                       ii

Declaration                                                                                                     iii

Certification                                                                                                   iv

Dedication                                                                                                      v

Acknowledgements                                                                                        vi

Table of Contents                                                                                           vii

List of Tables                                                                                                  xi

List of Figures                                                                                                 xii

Abstract                                                                                                          xiii

 

CHAPTER 1:  INTRODUCTION

1.1       Background to the Study                                                                    1

1.2       Statement of the Problem                                                                   10

1.3       Research Questions                                                                            12

1.4       Objectives of the Study                                                                      12

1.5       Hypotheses                                                                                         13

1.6       Scope of the Study                                                                              14

1.7       Limitations of the Study                                                                     14

1.8       Significance of the Study                                                                   14       

 CHAPTER 2:  LITERATURE REVIEW

2.1       Conceptual Framework                                                                      17

2.1.1    Nature and composition of public expenditure                                  19

2.1.2    Principles of public expenditure                                                         21

2.1.3    Capital expenditure and growth of the Nigerian economy                22

2.1.4    Recurrent expenditure and growth of the Nigerian economy             25

2.1.5    Effects of public expenditure on Nigerian economy                          28

2.2       Theoretical Framework                                                                      31

2.2.1    Wagner’s theory of increasing state activities                                    31

2.2.2    Peacock and Wiseman theory                                                             32

2.2.3    Musgrave theory                                                                                 33

2.2.4    Keynesian theory                                                                                34

2.3       Review of Related Empirical Literature                                            36

2.3.1    Summary of literature review in tabular format                                 91

2.4       Research Gap                                                                                      97

CHAPTER 3:     METHODOLOGY

3.1       Research Design                                                                                 99

3.2       Sources of Data                                                                                  99

3.3       Model Specification                                                                           100

3.3.1    Recurrent expenditure and economic growth                                     101

3.3.2    Capital expenditure and economic growth                                         102

3.4       Techniques for Data Analysis                                                            102

3.4.1    Unit root test                                                                                       103

3.4.2    Co-integration test                                                                              104

3.4.3    Vector error correction model (VECM)                                             105

3.5       Description and Justification of Research Variables                          107

3.5.1    Dependent variables                                                                           107

3.5.2    Independent variables                                                                         108


CHAPTER 4:  DATA PRESENTATION, RESULTS AND DISCUSSION

4.1       Data Presentation                                                                                110

4.2       Analysis of Data                                                                                 112

4.2.1    Trend analysis                                                                                     112

4.2.2    Descriptive statistic                                                                            121

4.2.3    Test of stationarity                                                                              125

4.2.4    Co-integration test (model one)                                                          126

4.2.5    Co-integration test (model two)                                                         128

4.2.6    Estimation of the impact of government recurrent expenditure

            on economic growth (model one)                                                       129

4.2.6.1 Vector error correction model (VECM): long-run dynamics`            129

4.2.6.2 Vector error correction model (VECM): short-run dynamics            132

4.2.7    Estimation of the impact of government capital expenditure

            on economic growth (model two)                                                      135

4.2.7.1 Vector error correction model (VECM): long-run dynamics             135

4.2.7.2 Vector error correction model (VECM): short-run dynamics            136

4.3       Test of Hypotheses                                                                             139

4.4       Discussion of Findings                                                                       142

CHAPTER 5: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1       Summary of Findings                                                                         148

5.2       Conclusion                                                                                          149

5.3       Recommendations                                                                              150

5.4       Contribution to Knowledge                                                                152

5.5       Recommended Area for Further Research                                         154

 

            References                                                                                          155

            Appendices I                                                                                       166

 

 


 

LIST OF TABLES

2.4.1                Summary of Literature Review                                                          91

 

4.1:                  Real Gross Domestic Product (RGDP), Recurrent Expenditure

                        on Administration (READM), Education (REED), Health

                        (REHLT), Economic Services (REES) and Transfers (RETRA)

                        and Capital Expenditure on Social and Community Services

                        (CESCS) and Economic Services (CEES) N’Billion                         111

4.2:                  Descriptive Statistic                                                                           121

 

4.3:                  Augmented Dickey-Fuller (ADF) Test                                              125

 

4.4:                  Lag Selection Criteria (Model 1)                                                        126

 

4.5:                  Johansen Co-integration Results (Model 1)                                       127

 

4.6:                  Lag Selection Criteria (Model 2)                                                        128

 

4.7:                  Johansen Co-integration Results (Model 2)                                       129

 

4.8:                  Vector Error Correction Model (VECM) Short-run

Dynamics (Model 1)                                                                           133

 

4.9:                  Vector Error Correction Model (VECM) Short-run

Dynamics (Model 2)                                                                           137

 

4.10:                Summary of Analysis                                                                         139

 

 

 

 

 

 

 

 

LIST OF FIGURES

 

 2.1:                 Relationship between government expenditure and

economic growth                                                                                17

 

 

2.2:                  Composition of public expenditure                                                    20

 

4.1:                  Trend of real gross domestic product (RGDP)                                   112

 

4.2:                  Trend of recurrent expenditure on administration (READM)       114

 

4.3:                  Trend of  recurrent expenditure on education (REED)                        115

 

4.4:                  Trend of recurrent expenditure on health (REHLT)                           116

 

4.5:                  Trend of recurrent expenditure on economic services (REES)            117

 

4.6:                  Trend of recurrent expenditure on transfers (RETRA)                        118

 

4.7:                  Trend of capital expenditure on social and community

services (CESCS)                                                                               119

 

4.8:                  Trend of capital expenditure on economic services (CEES)                        120

 

 


 


 

 CHAPTER 1

INTRODUCTION


            1.1           BACKGROUND TO THE STUDY

Government expenditure remains one potent instrument for influencing growth of economies all over the world, Nigeria inclusive. All over the world, governments seek to carter for their citizens and the society at large, through their expenditure as captured in their annual budgets.  The state spends on defence, agriculture, industry, pensions and gratuities as well as on education, healthcare and other social services.  It also spends on servicing national debts, capital investments as airports and infrastructural developments, etc.  Government also spends on its own maintenance as well as on other countries and governments.  Therefore, government or public expenditure could be seen as the expenses of government for its own maintenance, the society and the economy as a whole (Nura and Mustapha, 2016). 

With the enthronement of a democratically-elected government in Nigeria since 1999 to date, public expenditure being expenses of government to maintain its administration, the society and economy at large, has been on the increase (Ifere, Okoi and Eko, 2014).  Government has always devoted considerable amount of its resources to provide welfare facilities with the cardinal objective of improving the level, quantity and quality of these facilities, e.g. education, health, security etc. to enhance economic growth and wellbeing of the citizens.  Daniel, Simeon and Itode (2018), posited that the state is increasingly getting involved in economic activities as well as transfer payments to other countries.  As a result of this, they have argued that public expenditure has maintained an upward trend over time in virtually all the countries of the world.

The state’s major items of public expenditure today in Nigeria are administration, economic services, social and community services and transfers (Shakirat, 2018).  These expenditures could be classified into recurrent expenditure and capital expenditure.  Recurrent expenditures are expenses of government which occur regularly throughout the year.  They must be incurred on a regular basis if the functions and machinery of government must move on.  Good examples include:  salaries of employees of government, expenses on the maintenance of infrastructural facilities, repairs, money spent on general administration (Nwaeze, 2016).  Capital expenditure, on the other hand, includes expenses of government on the acquisition of things of permanent nature such as roads and building construction, hospitals and sea ports, electrical infrastructure as well as educational infrastructure (Okafor and Kenneth, 2016).  The relationship between public expenditure and development has always attracted considerable interests on the part of economic researchers both at the theoretical and empirical levels.  The rationale for the existence of government anywhere, Nigeria inclusive, could be viewed from the perspective of the institutions of property rights, value of law, governance, security, enforcement of the rule of law (Ogbuagu and Ekpenyong, 2016). Nigeria is a federation with three tiers of government that has multiple and diverse ethnic and other social-political differences, and which often determine the volume and rate of spending.  The revenue profile of the nation of which oil forms a greater percentage as well as other institutional factors such as institutional quality, political instability, characteristics of political regimes and social characteristics influence public spending and economic growth in Nigeria (Nwaoha, Onwuka and Ejem, 2017).

According to Jhingan (2009), public expenditure could affect economic growth in diverse ways. He asserted that increase in public expenditure tends to raise national income, employment, output and price. An increase in public expenditure during deflation increases the aggregate demand for goods and services and leads to a large increase in income via the multiplier process. It has the effect of raising disposable income, thereby increasing consumption and investment expenditures of the people.

He further stated that public expenditure on such public works as roads, canals, dams, parks, schools, hospitals, buildings and on such relief measures as unemployment, insurance and pensions increase income, employment and above all, the productive capacity of the economy. However, he noted that the effectiveness of public expenditure primarily depends upon the public works programme.

Drition and Lirim (2017) posited that public spending plays a vital role in propelling economic growth. Through public spending, more funds are channelled into the economy and if that is done, employment is expected to rise so also is income. A rise in income is accompanied by a rise in aggregate demand and this thus leads to an increase in output and hence, economic growth.

As the public sector size continued to grow relatively, the need for an appropriate mechanism that would ensure efficiency in resource allocation arose. To fill this perceived gap, the budget, which contains a package of public expenditure and revenue plan of the government for the year readily come to be a veritable tool for controlling, monitoring and relating government expenditure plans to policies of finance.

In this study, the recurrent variables of interest include government expenditures on administration. This reflects expenditure on defence, internal security and general administration. For instance, personnel costs and overhead costs such as travel and transport, utility services, telephone services, stationery, maintenance of office furniture and equipment; entertainment and hospitality.  Recurrent expenditure on education includes all regular expenses made in the educational sector for the building, processing and development of human resources in the country for development purposes.  These expenditures are made on educational institutions across the nation.  Recurrent expenditure on health reflects regular and non-stopping expenses made on health sector of the nation – hospitals and other health facilities and institutions in the country. Recurrent expenditure on economic services reflects regular expenditures on agriculture and natural resources, construction, manufacturing, mining, quarrying, transport and communication.  These expenditures are needed to ensure continuous activities in the sector to enhance growth and development.  Lastly, recurrent expenditure on transfers is disaggregated into public debt interest charges, capital repayments, external financial obligations, pensions and gratuities and others.   The capital expenditure variables of interest in this study include capital expenditure on social and community services which reflects all major expenditures for the acquisition of land and buildings and other non-financial assets used for more than one year in the health and education sectors of the Nigerian economy.  The other is capital expenditure on economic services which has to do with major capital expenses of government for acquiring land for building and other non-financial assets used for more than one year.  It includes capital expenditures of government on agriculture and natural resources, construction, manufacturing, mining, quarrying, transport and communication.  It is important to note at this juncture that for the administration of government to operate without hindrances; these expenditures are necessary and must be incurred. 

The evolution of government expenditure in Nigeria has revealed some basic trends over the years with regard to the patterns of capital, recurrent and total government expenditure (Olusegun, 2014). Within the period of the study, government capital expenditure maintained an upward movement until 1979 when it declined to ₦4.22bn from ₦5.2bn in 1978.  Government capital expenditure stood at ₦10.16bn in 1980 and declined to ₦8.34bn in 1988.  It resumed an upward movement in 1989 from ₦15.03bn to ₦498.03bn in 1999.  This might be as a result of programmes and plans put in place by government to have a democratic government. Again, it declined between the year 2000 and 2004 which probably could be attributed to the policy of government aimed at achieving its set goals and objectives (World Bank, 2007).  In 2005, capital expenditure stood at ₦519.42bn and increased to an all time high level of ₦1,152.8bn in 2009. Thereafter, it recorded a downward movement to ₦634.80bn in 2016. In 2017, government capital expenditure grew from ₦1,242.30bn in 2017 to ₦1,682.10bn in 2018. Government recurrent expenditure recorded  an upward movement in almost all the years under study except in 1973 when it recorded a little downward movement to ₦0.96bn from ₦1.01bn in 1972 and also in 1994 when it declined to N89.97bn from N136.73bn. From 1995 to date, there has been an upward movement in government recurrent expenditure. This trend simply showed that over the years, government recurrent expenditure has been greater than the capital expenditure competent, which many perceived as unproductive. From the above trend, it is likely that this pattern of expenditure in favour of recurrent over capital expenditure will continue in the foreseeable future. Therefore, it becomes very important to study impact public expenditure could have on growth of Nigerian economy.

Unfortunately, despite rise in government expenditure in Nigeria over the years, there still exist unending public outcries concerning the poor growth of the Nigerian economy.  The rising government expenditure many argue, has not translated in real terms to growth and development, as Nigeria ranks among the poorest countries in the world (Nwamuo, 2020).  Furthermore, many Nigerians wallow in abject poverty as more than fifty percent of them live on less than US $1 per day (Okoro, 2013).

Basic infrastructures such as roads, health facilities and institutions, qualitative education, communication facilities and improved technology are lacking.  Power is highly epileptic and unreliable, as a result no functional industries exist thereby contributing to the high level of unemployment in the country with its attendant negative consequences.  The level of technology is low and as a result, primitive technology and crude implements are still in use in agricultural practices today in Nigeria.  Low productivity therefore prevails as agricultural output is usually not enough to feed the nation (Ujah, Amaechi and Nwaeze, 2016).  All these issues negatively affect growth of the Nigerian economy.   Again, macroeconomic indicators such as balance of payments, exchange rate and national savings revealed that Nigeria as a country has not fared well in the last three decades.

An unending debate on whether or not increasing government expenditure supports economic growth in several countries of the world has continued till date.  While some scholars have argued in favour of it, others have argued against this.  Studies by Abu and Abdullahi (2010), Deepti and Deepak (2020) and Adeole, Abraham and Sunday (2021), revealed that government expenditure contributed to economic growth, while others by Chude and Chude ( 2013), Akpan (2005) and Jeff-Anyeneh and Ibenta (2019), suggested the contrary that public expenditure did not increase or enhance growth in the economy. In the view of the Keynesians, government could reverse economic downturns by borrowing funds from the private sector and then return such funds to the private sector through various spending programmes.  With this, high levels of government spending on consumption are likely to increase employment, profitability and investment through the multiplier effect on aggregate demand.  Thus, government expenditure – recurrent or capital could contribute positively to economic growth.  Verbeck (2000), and Laudau (1983), have argued that increasing government expenditure might not have its intended salutary effects on developing countries, given their high and often unstable levels of public debts.  Verbeck (2000), posited that as government expenditure grew increasingly (incessantly), the law of diminishing returns sets in and beyond some points, further increases in government expenditure would contribute to decline and economic stagnation.

Economic growth which is the dependent variable in this study brings about better welfare and standard of living of the people and this result from improvement in infrastructure, housing, education, health and improved agricultural productivity.  Thus, economic growth is a pivot ingredient for sustainable growth and development in any country or economy.  Sustainable development is enhanced by economic growth.  Scholars have viewed economic growth from different angles.  According to Jhingan (2009), economic growth is viewed as an increase in output.  He further explained that economic growth is related to a quantitatively sustained increase in a country’s per capita income or output accompanied by expansion in its labour force, consumption, capital and volume of trade.  Economic growth is also viewed as a steady process by which the productive capacity of the economy is increased over time to bring about rising levels of national output and income (Todara and Smith, 2006).  Olayemi (2017) saw economic growth as an increase in the net national product of a county in a given period of time.  According to Ochejele (2007), economic growth is characterized by high rate of structural transformation, international flow of labour, goods and capital, high per capita income, quality welfare facilities.

According to Ujah et al (2016), economic development depicts the process by which there is a long period of sustained growth in the national income of a country, accompanied by an overall sustained improvement in the national income and well-being of the people.  Here, the growth of real per capita income of a country is followed by an improvement in the standard of living of people in the country.  There is an expansion of health and educational facilities and the people have access to these facilities and other social amenities.  On the other hand, economic growth refers to the process by which there is an increased productive capacity of an economy leading to a rise in the level of national income but without any sustained improvement in the economic wellbeing or welfare of the people.  That is to say that an increase in national income may be matched with a proportionate increase in population, inflation, decayed infrastructural facilities as it is the case today with Nigeria.  Hence, cost of living is high while standard of living is low.

Furthermore, it is important to note at this juncture that the “less developed”, “under developed”,  “developing” and “third world” countries are terms used to describe the same class of countries suffering from economic underdevelopment. This is the stage at which the rate of growth of domestic savings is not enough to finance investments needed for better development of an economy (Obi, Ekesiobi, Dimnwobi and Mgbemem, 2016).  Underdeveloped economies have peculiar features as: poverty, low income per head, high degree of illiteracy, low savings and investments.  Others include low level of technology, agriculture as main occupation, exportation of raw material and high degree of unemployment.

According to the Keynesians, government has a role to play in achieving economic growth among nations of the world.  This is against the backdrop that government’s primary duty is the provision of public goods which the private sector might not have the capacity to provide such as roads, electricity, security and health facilities (Nwaeze, Njoku and Nwaeze, 2014).  However, Keynesian ideology majorly acknowledges the effective contribution of government capital expenditure towards achieving economic growth than government recurrent expenditure (Guhibet and Tsenba, 2016).  Thus, one tends to wonder whether recurrent expenditure of government actually matters in economic growth.

Like earlier stated in this work, government expenditure has continued to rise especially since the inception of the democratic era in Nigeria which began in 1999.  This ever-increasing government recurrent expenditure has attracted a lot of criticism and complaints from a good number of Nigerians who argued that the government was wasteful and that the funds spent on servicing the recurrent component of government expenditure should have been channeled to capital projects (Nurudeen and Usman, 2010).  The above argument has created an impression that recurrent expenditure did not increase economic growth.  There is the need for government to identify priority areas of spending – health, education, agriculture, industry and security. to enhance growth.  Monitoring of spending is also advised to ensure that desired intentions are met or gotten. Thus, the assertion above as well as the need to empirically investigate whether or not expenditure of government in Nigeria has significantly contributed to economic growth, has motivated this study.  All these issues have created major research lacuna which this present study seeks to bridge.   


            1.2           STATEMENT OF THE PROBLEM

The rise in public expenditure over the years has not put an end to the public outcries of citizens concerning the poor growth of the Nigerian economy.  Thus, the problem here is that rising government expenditure seems not to have really translated to meaningful growth and development in the Nigerian economy.  Okoro (2013), posited that many Nigerians have continued to wallow in abject poverty as more than fifty percent of them lived on less than US $1 per day.  According to Nwamuo (2020), Nigeria ranks among the poorest countries of the world.  Basic infrastructures and social amenities such as good roads, quality education, water, health facilities, communication are either totally lacking or in very poor state or condition.  Power is epileptic and highly unreliable as our level of technology is low.  These have contributed, in no small measure, to the poor growth of the Nigerian economy.

The enthronement of democracy in Nigeria in the year 1999 was accompanied by increased growth in recurrent expenditure such as administration expenditures of the National Assembly – salaries, wardrobe allowances, sitting allowances, buying of new cars for members on yearly basis, increase in national debt servicing as well as capital expenditure of government.  In all, over the years, increasing government expenditures seemed not to have replicated corresponding level of growth in the country.  Some past studies carried out in this area have revealed that government expenditure contributed to economic growth and development (Abu and Abdullahi, 2010; Deepti and Deepak, 2020 and Adeole, Abraham and Sunday 2021), while some other studies had suggested that public expenditure did not increase growth in the economy (Akpan, 2005; Chude and Chude, 2013 and Jeff-Anyeneh and Ibenta, 2019).  Hence, there exists a mix bag in the findings of their studies prompting the need to embark on the present study.

From available literature, it could also be observed that a good number of researches have been carried out on impact of public expenditure on economic growth in Nigeria, other developing countries (Agbonkhese and Asekome, 2014; Enya, Stephen and Ikenna, 2015; Shakirat, 2018) and in developed nations (Edward, 2009; Driton and Lirim, 2017; Acikgoz and Cinan, 2017).  Most of these studies concentrated on the relationship between government expenditure and economic growth in Nigeria on aggregated and disaggregated basis, while some were on impact of government spending on education, infrastructure and other public investments as related to economic growth in Nigeria (Iheanacho, 2016; Nwaoha, Onwuka and Ejem, 2017; Nura and Mustapha, 2015; Shakirat, 2018).  Some of these past studies dealt with impact of capital expenditure on economic growth in Nigeria (Gabriel and Johnson, 2013; Nazifi, 2014).  There also exist dearth of studies specifically on the area of impact of recurrent expenditure on economic growth in Nigeria.  This has necessitated the need for this study as it has also created a gap which the present study has bridged.

1.3       RESEARCH QUESTIONS

The following research questions are formulated in order to guide this study:

1.     To what extent does government recurrent expenditure on administration impact on economic growth of Nigeria?

2.     How does government recurrent expenditure on education impact on economic growth of Nigeria?

3.     To what extent does government recurrent expenditure on health impact on economic growth of Nigeria?

4.     How does government recurrent expenditure on economic services impact on economic growth of Nigeria?

5.     In what ways does government recurrent expenditure on transfers affect economic growth of Nigeria?

6.     To what extent does government capital expenditure on social and community services impact on growth of the Nigerian economy?

7.     How does government capital expenditure on economic services impact on economic growth of Nigeria?

 

1.4       OBJECTIVES OF THE STUDY

The general objective of this study is to examine impact of government expenditure on economic growth of Nigeria for the period 1980-2019,

The specific objectives of the study include to:

1.     examine impact of government recurrent expenditure on administration on economic growth of Nigeria.

2.     investigate impact of government recurrent expenditure on education on economic growth of Nigeria.

3.     investigate impact of government recurrent expenditure on health on economic growth of Nigeria.

4.     determine impact of government recurrent expenditure on economic services on growth of Nigerian economy.

5.     examine impact of recurrent expenditure on transfers on economic growth of Nigeria.

6.     investigate the impact of government capital expenditure on social and community services on growth of Nigerian economy.

7.     examine impact of government capital expenditure on economic services on growth of Nigerian economy.

  

1.5       HYPOTHESES

The following research hypotheses are formulated in this study in line with the objectives of the study:

Ho1:     There is no significant impact of government recurrent expenditure on administration on economic growth of Nigeria.

Ho2:     Government recurrent expenditure on education does not have a significant impact on economic growth of Nigeria.

Ho3:     There is no significant impact of government recurrent expenditure on health on economic growth of Nigeria.

Ho4:     Government recurrent expenditure on economic services does not have a significant impact on economic growth of Nigeria.

Ho5:     Government recurrent expenditure on transfers does not have significant impact on economic growth of Nigeria.

Ho6:     There is no significant impact of government capital expenditure on social and community services on growth of the Nigerian economy.

Ho7:     Government capital expenditure on economic services does not have significant impact on economic growth of Nigeria.

 

1.6       SCOPE OF THE STUDY

The study covered the period 1980 to 2019.  This period has been chosen in order to enable the researcher determine the impact of government recurrent and capital expenditure on economic growth of Nigeria for the period under study.  It covered the pre-democratic and democratic era in Nigeria.


1.7       LIMITATIONS OF THE STUDY

The study has been constrained mostly by finance. Adequate funding was required for sourcing the needed materials for the work. This was not readily available; however, this limitation was taken care of as the researcher had to borrow to finance activities and processes involved in the research work.


1.8       SIGNIFICANCE OF THE STUDY

This study will be of immense importance to the Nigerian economy in general and to the following parties in particular:

1.     Government

The findings of this work will be of immense benefit to the government of Nigeria and its agencies in policy formulation and implementation as it concerns the national budget.  It will deepen the knowledge and understanding of government on how the components of public expenditure – capital and recurrent affect the growth of the Nigerian economy.

2.     Students

Students conducting research on government spending and related topics will find this work very useful.  It can serve as a basis for further research on this area and as well contribute to academic literature in finance.

3.     Researchers

Researchers will benefit from this work.  It could serve as a reference point on which works related to public expenditure, fiscal policy and economic growth could be based on in the future.

4.   General Public

The general public will find this work very useful as it touches an important aspect of government activity which enhances the welfare of citizens.  This work will reveal to citizens issues on the classes of government expenditure and their effects on the welfare of citizens in particular and the economy at large.

5.   Investors and Business Owners

Investors and business owners will find the outcome of this study useful.  Government policies on investment and expenditure have the ability to promote small and medium scale enterprises as well as other businesses and economic growth as it reveals the expenditure of government and its effect on the economy.

 

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