IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF ECONOMICS AND BUSINESS MANAGEMENT (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 11 NO. 4 2025
DOI: 10.56201/ijebm.vol.11.no4.2025.pg217.237

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Effects of Government Sectoral Expenditures on Economic Growth in Nigeria: New Evidence from ARDL Bounds Testing Approach.

NYECHE, E, MOMODU AA and, WOLUGBOM, SC

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Abstract

This study empirically examined the effect of government sectoral expenditure on economic growth in Nigeria between 1985 and 2023. The study proxied government sectoral expenditure by government expenditure on agriculture, government expenditure on road & construction, government expenditure on health, government expenditure on internal security and government expenditure on transport & communication while Real Gross Domestic Product was used as the indicator of economic growth. Augmented Dickey-Fuller (ADF) approach of unit root test, bounds cointegration test and Autoregressive Distributed Lag (ARDL) technique were the main data analysis techniques adopted in this study while E-views 12.0 statistical package facilitated the data analysis. The findings of the study revealed that government expenditure on agriculture, government expenditure on road & construction, and government expenditure on health have a positive and significant effect on Real Gross Domestic Product in Nigeria in both short-run and long-run while government expenditure on internal security and government expenditure on transport & communication have a positive and non-significant short-run and long-run effect on Real Gross Domestic Product in Nigeria. Based on the findings, the study therefore concluded that government sectoral expenditure is significantly influences and drives economic growth in Nigeria. Among other things, the study recommended that Nigerian government should allocate a higher percentage of the national budget to the agricultural sector to improve food security, rural employment, and export potential. These investments should focus on mechanization, irrigation systems, research, and development. This can be achieved by establishing transparent agricultural subsidy programs and enhance public-private partnerships (PPPs) to attract investments in agribusiness.

keywords:

Government Sectoral Expenditure, Autoregressive Distributed Lag technique, bounds

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