The Developmental Implications of Nigeria’s Public Spendings: an Ardl Analysis

Abstract

Abstract Government expenditure is widely recognized as a potent tool for enhancing growth, redistributing income and reducing poverty in an economy. There exists a consensus in the literature that an adequate and effective macroeconomic policy is critical to any successful development process aimed at achieving high employment, sustainable economic growth and price stability. Is the Nigerian government a developmental state? In an attempt to answer this question, this study examined the short and long run impact of public expenditure on economic development in Nigeria from 1980 to 2020. Specifically, it seeks to determine the nature and direction of causality between government spending and economic development by employing the pair wise Granger causality technique and Autoregressive distributed lagged model to evaluate the empirical evidence of the impact of public expenditure on economic development in Nigeria. The granger causality result reveals that there is a bidirectional relationship between government spending and economic development in Nigeria. Also, the analysis showed that there is a long run relationship between public expenditure and economic development. Therefore, this study recommends that to achieve sustainable economic development in Nigeria, Government expenditure should be increased in the health, education and agricultural sectors in the economy.