Efficiency of Public Educational Expenditures in Nigerian Manufacturing Sector: A Data Envelopment Analysis

Abstract

Efficient resource allocation plays an essential role in manufacturing productivity, with a need to assess expenditure efficiency before addressing the impact of education. Amidst global growth in education budgets, financial strain requires improved allocation with a focus on efficiency to mitigate deficits. The manufacturing sector in Nigeria has experienced a consistent decline in productivity and prolonged stagnation over the years, as well as a decrease in capacity utilization. Based on this premise, this study aims to examine the effect of public educational expenditure on the efficiency of resources used in the Nigerian manufacturing sector over the period 1981-2019. The Data Envelopment Analysis is used to estimate the efficiency scores for the years under examination. The results show that, within the DEA estimation of efficiency, public educational capital expenditure does not result in the efficient use of resources for the majority of years under investigation except for the year 2019; only 16 years on public educational recurrence expenditure showed constant returns, and no years showed a decreasing return to scale, compared to the year 1982. The inefficiencies in utilising resources are linked to scale inefficiencies, and the government should target public spending policy to increase the size of capital projects in the education sector.