Impact of Public Expenditures on Inclusive Economic Growth in Nigeria: 1980-2017

Abstract

This study investigated the impact of public expenditures on inclusive economic growth in Nigeria: 1980-2017. The study employed autoregressive distributed lag (ARDL) model, stationarity test, and other diagnostic tests to investigate whether or not Federal government public expenditures have impact on inclusive economic growth in Nigeria. This study made use of six explanatory variables namely: Federal government public expenditures in agriculture, education, health, internal security, social and community services, and transport and communications to establish relationships with the two dependent variables used (employment growth rate and human development index growth rate). These two dependent variables served as proxies for inclusive economic growth since they contribute to the general standard of living. The study found that a long-run stable relationship existed between the regressors of public expenditure and inclusive economic growth. The t-statistics also revealed that each of the regressors were not statistically significant at 5%. However, the F-statistics revealed that the entire systematic components of each model were statistically significant at 5%. Therefore, the study concluded that the regressors have not significantly contributed to inclusive economic growth individually. However, the F-statistics shows that collectively the regressors have significantly impacted inclusive economic growth in Nigeria. This study recommended among other things that public expenditures should be directed towards inclusive economic activities in a manner that they will create sustainable linkages across economic value chains which will ensure inclusive economic growth in the long run.