PUBLIC SECTORAL ALLOCATION AND ECONOMIC GROWTH IN NIGERIA.

Abstract

This study investigated empirical analysis of government expenditure and economic growth in Nigeria spanning from 1980 to 2020. Data for the study were obtained from Central Bank) of Nigeria (CBN statstical bulletin. The dependent variable of the study is the Real Gross Domestic product (RGDP) as a proxy for economic growth while the independent variables are, education expenditure (EDUC), health expenditure (HLT), defense expenditure (DFC), construction expenditure (COE), water resource (WTR), and transport and communication expenditure (TCE). The variables were subjected to unit root test using Augmented Dickey Fuller unit root test. The  ADF unit root test revealed a mixed order of integration. This means that DFC and TCE are stationary at level 1(0) while, RGDP, EDUC, HLT, WTR and COE are stationary after first difference 1(1). Based on this the study adopted Auto-regressive Distributive Lag (ARDL) model to ascertain the long and short-run relationship as well as the speed of adjustment. The auto-regressive distributive lag (ARDL) test showed that there is no long-run relationship among the variables using the bound test but the short-run result reported that except water resource (WTR) expenditure that showed insignificant relationship with RGDP, all other study variables, EDUC, DFC, HLT and TCE are positive and significant either at the current year or previous year period. Based on the findings it is recommended that
the budgetary allocation of the country should be increased to enable the citizens have good drinking water.