Re-Engineering Public Expenditure Patterns for Economic Development in Nigeria

T. A. Egunjobi


In recent times budget has been recognized as a worldwide tool for economic management. To this end there had been noticeable increase in government spending in virtually all sectors of the various economies due to increased demand for structures and facilities to enhance growth and development. The role and size of government expenditure had generated a great deal of controversy in macroeconomics. Some suggested that government expenditure beyond a certain limit of its core functions would have an adverse impact on economic. Some however, argued that increased government expenditure is a necessary condition for growth in output. In Nigeria, rising government expenditure has not translated to meaningful development because the rate of poverty is still very high, especially in the face of huge corruption and diversion of public funds for selfish purposes. The objective of the study was to first, analyze the impact of public consumption, private investment, public investment and total expenditure on economic growth. Secondly, through the use of the cointegration tests examine the nature of the relationship between economic growth and government consumption, government investment, private investment and total expenditure. Thirdly, determine the causal relationship, if any between economic growth and public expenditure on one hand and public expenditure and private investment on the other by conducting causality tests. The data span is from 1977 – 2008.The findings revealed that private investment and public investment positively impact on economic growth while total expenditure and public consumption impact negatively on economic growth. Also, a long run relationship exists between economic growth and public consumption, private investment, public investment and total expenditure. Again a unidirectional causality existed between economic growth and total expenditure, while there was no causal relationship between private investment and public investment in Nigeria. It is recommended that government should focus on spending on infrastructures and human capital and there is the need for practical complementarities between the private sector and public sector.


Government Expenditure; Economic Growth; Private investment; Regression

Full Text:



Abu, N. & Abdullahi, U (2010). Government Expenditure and Economic Growth in Nigeria, 1970-2008: A Disaggregated Analysis. Business and Economics Journal, 2010: BEJ-4. Retrieved from:

Adebiyi, M. A. (2003). Debt Service-Education Expenditure Nexus: The Nigerian Experience. In Selected Papers for the Year 2002 Annual Conference of the Nigerian Economic Society (NES) on Human Resource Development in Africa, August 2002 (pp. 243-267). Nigeria.

Aschauer, D. A. (2000). Public Capital and Economic Growth: Issues of Quantity, Finance, and Efficiency. Economic Development and Cultural Change, 48(2), 91-406.

Barro, R. (1990). Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy, 98(5), 103-125.

Barro, R. (1991). Economic Growth in Cross-Section of Countries. Quarterly Journal of Economics, 106(2), 407-443.

Barro, R. (1990). Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy, 98(5), S103-S125.

Barro, R. & Sala-i-Martin, X. (1992). Public Finance in Models of Economic Growth. Review of Economic Studies, 59, 645- 661.

Bird, R. M. (1971). Wagner’s ‘Law’ of Expanding State Activity. Public Finance, 26, 1-26.

Brons M, de Groot HLF, Nijkamp P, (1999). Growth Effects of Fiscal Policies. Tinbergen Discussion Paper, Amsterdam: Vrije Universiteit, 49, 783-792.

Central Bank of Nigeria. (2008). Central Bank of Nigeria Statistical Bulletin. Abuja, Nigeria.

Dickey, D. A. & Fuller, W. A. (1981). Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root. Econometrica, 49, 1057-72.

Easterly, W. & Rebelo, S. (1993). Fiscal Policy and Economic Growth: An Empirical Investigation. Journal of Monetary Economics, 32, 417-458.

Engle, R. F. and Granger, C. W. (Eds.) (1991). Long-Run Economic Relationships: Reading in Cointegration. Oxford: Oxford University Press.

Folster, S. & Henrekson, M. ( 2001). Growth Effects of Government Expenditure and Taxation in Rich Countries. European Economic Review, 45(8), 1501-1520.

[15] Ghura, D. (1995). Macro Policies, External Forces, and Economic Growth in Sub-Saharan Africa. Economic Development and Cultural Change 43(4), 759-78.

Gujarati, D. N. (1995). Basic Econometrics, (3rd ed.). McGraw-Hill.

Henrekson, M. (1992). An Economic Analysis of Swedish Government Expenditure. Avebury.

Jong-Wha, L. (1995). Capital Goods Imports and Long-Run Growth. Journal of Development Economics, 48(1), 91–110.

Kweka, J. & Morrissey, O. (2000). Government Spending and Economic Growth in Tanzania, 1965 – 1996. Credit Research Paper No. 00/6.

Kelly, T. (1997). Public Expenditures and Growth. Journal of Development Studies, 34, 60-84.

Knoop, T. A. (1999). Growth, Welfare, and the Size of Government. Journal of Economic Inquiry, 37(1), 103-119.

Komain J., Brahmasrene T. (2007). The Relationship between Government Expenditures and Economic Growth in Thailand. Journal of Economics and Economic Education Research. Retrieved from:;col1.

Krzyzaniak, M. (1974). The Case of Turkey: Government Expenditures, the Revenue Constraint, and Wagner’s Law. Growth and Change, 5, 13-19.

Laudau D. (1986). Government and Economic Growth in LDCs: An Empirical Study. Economic Development and Cultural Change, 35, 35-75.

Lin, S. & Baurn, D. (1993). The Differential Effects on Economic Growth of Government Expenditures on Education, Welfare and Defense. Journal of Economic Development, 18(1), 175-184.

Ogiogio G. (1995). Government Expenditure and Economic Growth in Nigeria. Journal of Economic Management, 2(1). Retrieved from: 10

Olugbenga, O. & Owoye, O. (2007). Public Expenditure and Economic Growth: New Evidence from OECD Countries. Retrieved from:

Oyinlola, O. (1993). Nigeria’s National Defense and Economic Development: An Impact Analysis. Scandinavian Journal of Development Alternatives, 12(3).

Ram, R. (1986). Causality Between Income and Government Expenditure: A Broad International Perspective. Public Finance, 41(3), 393-414.

Sahni, B. S . & Singh B. (1984). On the Causal Directions Between National Income and Government Expenditure in Canada”, Public Finance, 39(3), 359-393.

Singh, B. & Sahni, B. S. (1984). Causality Between Public Expenditure and National Income. Review of Economics and Statistics, 66(4), 630-643.

Wagner, A. (1883). Three Extracts on Public Finance. In R. A. Musgrave and A. T. Peacock (Eds). Classics in the Theory of Public Finance. London: Macmillan.

Yesufu, T. (2000). The Human Factor in National Development: Nigeria. Ibadan: Spectrum Books Ltd.



  • There are currently no refbacks.


How to do online submission to another Journal?

If you have already registered in Journal A, then how can you submit another article to Journal B? It takes two steps to make it happen:

1. Register yourself in Journal B as an Author

Find the journal you want to submit to in CATEGORIES, click on “VIEW JOURNAL”, “Online Submissions”, “GO TO LOGIN” and “Edit My Profile”. Check “Author” on the “Edit Profile” page, then “Save”.

2. Submission

Go to “User Home”, and click on “Author” under the name of Journal B. You may start a New Submission by clicking on “CLICK HERE”.

We only use three mailboxes as follows to deal with issues about paper acceptance, payment and submission of electronic versions of our journals to databases:;;

Copyright © 2010 Canadian Research & Development Centre of Sciences and Cultures
Address: 9375 Rue de Roissy Brossard, Québec, J4X 3A1, Canada

Telephone: 1-514-558 6138
Http:// Http://