The Effect of Federal Government Revenue and Expenditure On Economic Growth in Nigeria – An Empirical Review

Abstract

This study examined the effect of federal government revenue and expenditure on the economic growth of Nigeria for the period 1983 to 2018. Prior to now many studies have been completed on the subject matter and yet there doesn't seem to be a consensus of opinion amongst the different researchers on the relationship between revenue and expenditure interface in Nigeria. This could be ascribed to the different approaches gies set forward to clarify the relationship; thus warranting the need for this research .The investigation embraced an ex-post facto research design to produce test results via Bounds test, ARDL short/long run estimates and to make forecasts. The full scale economic factors used in the study includes Real Gross domestic product (proxy for economic growth), federal government retained revenue, non-oil revenue, capital expenditure and recurrent expenditure. We chose to be different in this study with a conscious omission of oil revenue as a variable of study. Findings of the research showed that federal government retained revenue; non-oil revenue and recurrent expenditure were statistically significant in explaining the relationship with economic growth in the short run; while capital expenditure was not at 5% Alpha level. Federal government retained revenue was also found to be statistically significant in the long run. On the basis of these findings, it was concluded that the influential growth variables are federal government retained revenue; non-oil revenue and recurrent expenditure. The researchers thus recommend that government should be tactful in her efforts at fiscal policy synchronization. There is need to monitor Nigeria’s expenditure pattern, increase in revenue and a consequent increase in governments retained revenue. This will make for an effective adjustment in the utilization of capital expenditures and to assist with raising the level of economic growth in Nigeria