Fiscal Policy and Economic Development in Nigeria

Abstract

The effect of fiscal policy on Nigeria's economic growth is the focus of this research. It zeroes attention on the effects of government spending and taxation on literacy rates and per capita income separately. The analysis was conducted using annual time series data that spans from 1981 to 2022. One method that was used to analyse the data was Ordinary Least Square (OLS). Revenue from taxes and inflation had a negative and substantial effect on per capita income, whereas government aggregate expenditure and population growth were found to have a positive and significant impact. The results also demonstrated that tax income had a negative and statistically significant effect on the literacy rate, whereas government aggregate expenditure and population growth had a significant positive effect. Another finding indicated that the literacy rate in Nigeria was significantly and negatively affected by gross xed capital accumulation. When it comes to driving income growth and economic development, the government should prioritise growing investment in critical productive areas like infrastructure, education, healthcare, and social services. The government should also make sure that investments in educational development—like building schools and information and communication technology facilities—support capital expenditures, and that tax rules are revised to make them easier on families with school-aged children.