Impact of Government Expenditure on Economic Growth in Nigeria: A Disaggregated Analysis

Abstract

This study uses a disaggregated analysis to examine the impact of government expenditures in agriculture and education on economic growth in Nigeria over the period 1980 -2017. To achieve the objective of the study, agriculture was disaggregated into agricultural outputs (AGRO), government expenditures on agriculture (GEXA), poultry (POUL) while education was disaggregated into government expenditures on education (GEXE) and school enrolment (SCHE). Annual time series data on gross domestic product (GDP), AGRO, GEXA, POUL, GEXE and SCHE was collected from the online database of World Bank development indicators (WDI) and the 2018 Statistical Bulletin of the Central Bank of Nigeria (CBN). The data were analyzed using the structural equation model. Findings from the study show that government expenditures in agriculture and in education have different impacts on economic growth in Nigeria over the period of the study. The results of agricultural sector block reveals that agricultural outputs, government expenditure on agriculture and poultry production have positive and significant impacts on the Nigerian economy. Similar results are found for education sector block where government expenditures in education and school enrolment are found to have positive impact on the growth of Nigerian economy. Based on the findings of this study, it is recommended that a review of the Nigerian budgetary system should be geared towards capital projects like diversification of agricultural sector and the education sector.