The impact of government expenditure on economic growth in nigeria (1980-2010)

Thesis Abstract

Abstract
This study aims to investigate the impact of government expenditure on economic growth in Nigeria from 1980 to 2010. As a developing country, Nigeria has faced various economic challenges over the years, and government expenditure is considered a crucial policy tool to stimulate economic growth. The study utilizes time series data analysis to examine the relationship between government expenditure and economic growth in Nigeria during the specified period. The research employs the Vector Error Correction Model (VECM) to analyze the long-run and short-run dynamics between government expenditure and economic growth. The study also considers other relevant variables such as foreign direct investment, inflation rate, and exchange rate to capture the broader economic context in which government expenditure operates. The findings of the study indicate a mixed impact of government expenditure on economic growth in Nigeria. In the long run, government expenditure is found to have a positive and statistically significant impact on economic growth, suggesting that sustained public spending can contribute to overall economic development. However, in the short run, the relationship between government expenditure and economic growth is less clear, with some periods showing a positive impact while others exhibit a weaker connection. Furthermore, the study reveals that government expenditure alone may not be sufficient to drive economic growth in Nigeria. The presence of other factors such as foreign direct investment and exchange rate stability also play critical roles in shaping the country's economic performance. Therefore, policymakers need to adopt a holistic approach that considers multiple economic variables to achieve sustainable and inclusive growth. Overall, the research underscores the importance of prudent fiscal management and strategic allocation of government resources to maximize the impact of public spending on economic growth. By understanding the complex interactions between government expenditure and economic performance, policymakers can design more effective policies to promote long-term development and address the socio-economic challenges facing Nigeria.