IMPACT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA (2000-2015)
Abstract
The study examined the impact of government spending on Nigeria’s economic growth using the period 2000-2015 (5 years).
More specifically, the study sought to assess government spending and economic growth.
This study is made up of collaborators from different departments of the Oshodi-Isolo City Council.
The study uses a stratified random sampling method and surveys 100 of his staff members from various departments. Survey design employs primary and secondary data that allow the design to make data-driven sampling decisions for survey tools. Review methods of meeting, planning, and content to help researchers answer and draw conclusions about research questions.
This study is a research study and its main analyte is public opinion collected with the help of questionnaires. Furthermore, the data were presented with the aid of descriptive statistics, which is very easy to understand make deductions, and the chi-squared technique was employed to test the hypotheses in order to make valid conclusions.
Result from the study indicated that government capital expenditure has contributed significantly to economic growth in Nigeria between 2000 and 2015; and Government recurrent expenditure has contributed significantly to economic growth in Nigeria between 2000 and 2015.
Also the relationship between government spending and economic growth is important for all developing economies like Nigeria, most of which have experienced increasing level of government spending and have achieved low level of economic development overtime.
Base on this, the study advised that Government capital expenditure needs to be based on the capital projects the economy really need to develop and not basing the expenditure on the wrong capital project., secondly, government should monitor the level of productivity in relation to demand for them., all existing infrastructural facilities that are in dilapidated state should be rebuilt and mount up to international standard., thirdly, the government should invest more on research so the economy can meet up with the new era technologies., and lastly, The government should borrow less, while save and investment more.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The nexus between government expenditure and economic growth has continued to generate controversies among scholars. Governments perform two main functions in the economy: protection (defense or security) and provision of certain public goods (Robinson, et al, 2014). The protection function consists in establishing the rule of law and enforcing property rights. Crime prevention functions reduce the incidence of crime, protect lives and property, and protect entire nations from external attacks. Furthermore, it is the government’s responsibility to improve the material well-being of its people by providing adequate public goods such as roads, water, electricity, health, education and housing.
Some scholars such as Abdullah (2010). Okoro (2013) and Robinson et al. (2014) argued that increased government spending on socioeconomic and physical infrastructure drives economic growth, to name a few. For example, government spending on health and education tends to increase labor productivity and further boost national production levels. Similarly, government spending on physical infrastructure such as roads, electricity, communications, and water lowers manufacturing costs, encourages private sector investment, attracts foreign investment, and enhances corporate performance and profitability. , to further boost economic growth. Scholars such as Ranjan (2008) and Corray (2009) support these views, pointing out that increased government spending makes a positive contribution to economic growth.
However, some scholars, such as Egbetunde and Fasanya (2013) and Taiwo and Kabir (2011), do not support the claim that increased government spending drives economic growth.
The relationship between government spending and economic growth is important for all developing countries like Nigeria. Most of them have increased levels of government spending and lower levels of economic development over time. Since independence, Nigeria’s income has increased every year. And while public spending by the government has been on the rise for many years, Nigeria still suffers from low productivity relative to demand, aging existing infrastructure, low technology levels and high fees. I’m holding Unemployment, lack of functional and effective things, infrastructure, epileptic power supply, low per capita income, low savings and investment, etc.
1.2 Problem definition
Unfortunately, Nigeria is one of the poorest countries in the world, so increased government spending has not led to significant improvements in people’s living standards. Moreover, the majority of Nigerians continue to live in extreme poverty, with over 50% living on less than US$2 a day. In addition to this, derelict infrastructure, especially roads and power, has caused the collapse of some local industries and the exodus of some multinationals, raising the country’s unemployment rate. Macroeconomic indicators such as rates, interest rates, exchange rates, national savings and per capita income show that Nigeria has not fared well in recent years.
1.3 Purpose of the survey
This study seeks to examine the impact of government spending on Nigeria’s economic growth. Specifically, the research objectives are to:
Examine the impact of government capital investment on Nigeria’s economic growth.
Examine the impact of recurring government spending on Nigeria’s economic growth. 1.4 Research question
Based on the above objectives, this study attempts to provide satisfactory answers to the following research questions.
What impact will state investment have on Nigeria’s economic growth?
What is the impact of recurring government spending on Nigeria’s economic growth?
1.5 Research hypothesis
Therefore, according to the research goals and questions of interest, the following hypotheses are made.
H01:
Government investment did not contribute significantly to Nigeria’s economic growth between 2000 and 2015.
H02:
Recurring government spending did not contribute significantly to Nigeria’s economic growth between 2000 and 2015.
1.8 Scope of investigation
The purpose of this study is to examine the impact of government spending on Nigeria’s economic growth over the period 2000-2015. This timeframe was chosen to examine recent trends in government spending and economic growth in the Nigerian economy.
1.9 Research Limitations
Several limitations were identified during the conduct of the study. they are:
a) Lack of research materials:
Insufficient research materials available to researchers limit research.
b) Time limit:
The timeframe for conducting this research is relatively short given the researchers’ other scientific commitments and dedication. 1.10 Separator
In this kind of research study, there is usually a desire to touch on as many areas related to the topic as possible. However, the exclusive nature of this work makes these interesting topics easy to explore.
1.11 Study structure
This study contains his five chapters. The first chapter is an introduction to the study. Chapter 2 provides an overview of relevant literature relevant to the study. Chapter 3 focuses on the evolution of government spending and economic growth in Nigeria. Chapter 4 describes research methodology and empirical analysis. The final chapter focuses on a summary of the research findings, conclusions.
1.12 Definitions
Capital Expenditure – This is the portion of government expenditure incurred on capital projects such as roads, railways, telecommunications, and electricity. These types of costs involve significant costs and do not occur on a regular basis. Recurring Expenditure – This is the recurring government expenditure component such as wages and salaries, interest on loans, general administration and maintenance.
Government spending – This also refers to public spending. This is the total amount spent by the government to maintain its institutional status and to ensure that public goods reach its citizens.
Economic Growth – This is the quantitative increase in a country’s productivity level or GDP during two consecutive he quarters.
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