Public Expenditure and Human Development in Nigeria

This research empirically examined the effect of public expenditure on human development in Nigeria from 1990 to 2025. The study proxied public expenditure by public health expenditure, public education expenditure, public social service expenditure and public research and development expenditure, while human development was measured by the Human Development Index (HDI). The study was anchored on the Human Capital Theory and the Capability Approach. Annual time series data covering thirty-six years were used; the data were sourced from United Nations Development Programme and Central Bank of Nigeria Statistical Bulletin. The data were described using descriptive statistics and trend analysis, tested for stationarity using the Augmented Dickey-Fuller (ADF) approach and examined for multicollinearity using the variance inflation factor. The ARDL bounds cointegration test was used to establish the long run relationship among the variables, while the Autoregressive Distributed Lag (ARDL) model and its error correction form were used to estimate the long-run and short-run parameters. The results showed that the variables have mixed stationarity of I(0) and I(1) and that a long-run relationship exists among them. Also public education expenditure, public social service expenditure and public research and development expenditure have positive and significant effects on the Human Development Index in the long run, while public health expenditure has a negative and significant effect. The error correction coefficient (-0.6068) shows that about 61 percent of any disequilibrium is corrected within one year. The study concluded that public expenditure significantly drives human development in Nigeria. The study recommended, among others, that government should raise the share of education spending towards the UNESCO benchmark, and should reform the management of public health spending so that allocations reach primary health care facilities and translate into better health outcomes.