An Assessment of the Effect of Capital and Recurrent Expenditure on Economic Growth in Nigeria
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Date
2015
Journal Title
Journal ISSN
Volume Title
Publisher
Faculty of Management Sciences, University of Ilorin, Nigeria
Abstract
Government oftentimes uses expenditure to control the economy. The study assesses the
effect of government expenditure on economic growth of Nigeria over a period of thirty
two years, that is, 1981-2013. Total capital expenditure and total recurrent expenditure
were used as proxy for government expenditure while economic growth was proxied by
gross domestic product. The data used for analysis were obtained from the Central Bank
of Nigeria (CBN) statistical bulletin. In order to observe the properties of time series
data, diagnostic tests were carried out on the variables. The regression result showed that
total capital expenditure is positive and significant in explaining and predicting the
economic growth proxy by GDP, while total recurrent expenditure revealed a negative
and a significant relationship with gross domestic product. Inflation which serves as a
control variable showed a positive and significant relationship with gross domestic
product. The study was able to conclude that total capital expenditure contributed
positively to gross domestic product and that higher total recurrent expenditure
decreases economic growth of Nigeria under the study period. The study recommended
that the proportion of government total expenditure that goes into capital expenditure
financing should be increased. Also, a high degree of accountability and transparency
be maintained on government spending at various units of the economy to prevent
channeling of public funds to private accounts of government officials.
Description
Keywords
Public Expenditure,, Government Funds,, Private accounts, Nigeria, Economic growth,
Citation
Osemene, O. F., Fagbemi, T.O., Kazeem, H. S. & Akano, A. I. (2015): An Assessment of the Effect of Capital and Recurrent Expenditure on Economic Growth in Nigeria. Ilorin Journal of Management Sciences, 2(1), 108 – 121. Published by Faculty of Management Sciences, University of Ilorin, Nigeria.