Government Spending and Inclusive-Growth Relationship in Nigeria: An Empirical Investigation

Abstract

Abstract This study has investigated the relationship between government spending and inclusive growth in Nigeria over the period 1995 to 2014. Specifically, it examined how, and to what extent, government spending on education, government spending on health, economic freedom, public resource use, and real GDP growth rate have impacted on inclusive growth in the country. It used the Dickey-Fuller GLS unit root test to ascertain the order of integration of the series. Consequently, through the Auto-Regressive Distributed Lag (ARDL) bound testing technique, the study found that in the long-run government spending on health, economic freedom, public resource use and real GDP growth rate had significantly positive influence on inclusive growth. In the short-run, however, only real GDP impacted significantly on inclusive growth while other variables were not significant in causing inclusive growth. Thus, in conclusion, government spending in the form of redistributive spending on health propelled inclusive growth in Nigeria.