GOVERNMENT CAPITAL EXPENDITURE AND ECONOMIC GROWTH: A DISAGGREGATED SECTORIAL ANALYSIS
Abstract
This study analyzes the dynamic impact of government capital expenditure on Nigeria's economic
growth from the first quarter of 2000 to the fourth quarter of 2023. Capital expenditure was categorized
into four primary sectors: expenditures on social and community services, economic services,
administrative services, and transfers. Government efficacy was utilized as a control variable, whilst
the gross domestic product (GDP) growth rate functioned as a proxy for economic growth. Data were
obtained from the World Bank's World Development Indicators and the Central Bank of Nigeria's
Statistical Bulletin. The limits testing methodology for cointegration validated a long-term equilibrium
association between capital spending and economic growth. Empirical findings indicated that
governmental capital expenditure on social and community services (such as education and health)
and on economic services (including agriculture, energy, and infrastructure) exerted a statistically
significant and beneficial impact on GDP growth in both the short and long term. Conversely, spending
on administrative services and transfers, while positively correlated with GDP, was deemed
statistically insignificant, indicating potential inefficiencies or no economic impact. Unexpectedly,
government efficacy had a negative and negligible correlation with growth, indicating institutional
deficiencies and governance obstacles. The results highlight the essential importance of productive
capital investment in expediting economic growth. Consequently, it is advised that the Federal Ministry
of Finance, Budget, and National Planning augment capital allocations for social and economic
services, where investment returns are evidently substantial-augmenting.
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Published in Wellspring University Journal of Social and Management Sciences
ISSN: 2616-1296
This article appears in our peer-reviewed academic journal
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