Government Recurrent Expenditure Effect on Economic Growth: Evidence from Expenditure on some Selected Variables

Authors

  • Kidochukwu Obi Callistar

Keywords:

Economic functions of government; Recurrent expenditure; Social and community services; Transfers; Economic growth

Abstract

The study investigated into the effect of some selected government recurrent expenditure on
economic growth, with emphasis on social and community services, economic services and transfers.
In a modern economy, government perform two functions; economic and non-economic. Studies have
shown that developed countries focus more on transfers and subsidies, while developing economies pay
more attention on social and community services. For the Nigerian state, government performed these
functions religiously, and available statistics showed that government spend more on recurrent goods
and services, specifically on transfers, than capital goods and services and this has implication on
growth. The study adopted Vector Error Correction Model technique. Other preliminary tests were
conducted. From the empirical result, it was evident that economic services and social and community
services are not growth drivers of the Nigerian state. The implication of this finding is that government
efforts on improving the lives of its citizens has not translated into growth. It was recommended that
government should make effort to also allot funds to capital expenditure in such a way that there would
be no much significant difference between capital and recurrent spending as this would improve the
lives of the citizens on the one hand, and influence the growth rate of the economy on the other.

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Published

2020-03-16

Issue

Section

Business Administration and Business Economics