Government Sectoral Expenditure and Economic Growth in Nigeria

This study examined government sectoral expenditure and economic growth in Nigeria. The study specifically focused on government expenditure on general administration, defense, internal security, education, and health effects on real gross domestic product. The study adopted the ex post facto research design and data were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin, spanning from 2000-2022. The unit root test using Augmented Dickey-Fuller (ADF) showed stationarity at 1(0), 1(1), and 1(2). The hypotheses were tested using the ARDL model. The results showed that government expenditure on general administration has a very small but highly significant positive effect on real GDP. Government expenditure on defense has an insignificant negative impact on real GDP. Government expenditure on internal security has an insignificant positive effect on real GDP. Government expenditure on education has a significant positive impact on real GDP. Government expenditure on health has an insignificant negative impact on real GDP. In summary, the findings across different sectors reveal varying impacts of government expenditure on economic growth. Based on these, the study recommends increase efficiency in general administration spending, the government should reassess and possibly reallocate funds from defense to other sectors that have a more direct and significant impact on GDP growth, such as education or infrastructure. The government should focus on internal security investments that specifically bolster economic activities. An increase education funding and investments should be made in both primary and higher education to ensure a well-educated workforce. Finally, reassess the allocation of health funds and strive to enhance the effectiveness of health expenditure to promote economic growth.