IMPACT OF PUBLIC EXPENDITURE ON THE GROWTH OF NIGERIAN ECONOMY

Abstract

This study is an attempt to assess the impact of public expenditure on the growth of the Nigerian economy, and to ascertain whether there is a relationship between gross domestic product (GDP) and government expenditure in Nigeria. It covers the period of 1981 – 2011 and the Ordinary Least Square (OLS) method of econometric technique was used.The econometric analysis indicates that although there is a positive relationship between the dependent and independent variables, the adjustment of economic growth or gross domestic product was a fair one which made it difficult to reject the null hypothesis. The policy implication of the above scenario is that government over the years appears to be bad managers of resources and have failed to play their role in the process of economic growth and development. The study recommended an urgent need to instill fiscal discipline in government expenditure by initiating far reaching effective internal control measures and more proactive economic management coordination and implementation as well as discouraging all non-productive activities and expenditures in all tiers of government forthwith. Also, both the Federal government and Central Bank of Nigeria (CBN) should be more articulate in managing the exchange rate effectively to achieve her macroeconomic objectives.This will stimulate investment surplus thus raising output and enhancing the standard of living of Nigerians.