IMPACT OF GOVERNMENT CAPITAL EXPENDITURE ON THE ECONOMIC GROWTH RATE OF NIGERIA

Abstract

Public expenditure strives to provide amenities for the general public as well as distribute resources among its citizens. Government spending can be divided into three main categories: consumption, transfers, and interest payments. Capital and recurrent expenditure make up the majority of government spending in Nigeria. These are further divided into administration, social and community services, economic services, and transfers. Recurrent spending, in contrast to capital spending, does not result in the creation of assets for the future or the reduction of any government liabilities. Recurrent expenses include payments for pensions, interest on prior debt, subsidies, and employee salaries. This study attempts to scientifically examine the effects of government capital expenditure in its disaggregated form (administration, social and community service, economic services, transfers, and government deficit) on Nigeria's economic growth rate from 1981 to 2021 in addition to evaluating how well government expenditure performed in the years following the pandemic in 2021. Secondary data sourced from the CBN statistical bulletin, 2021, were used in the analysis. Because the variables have a mixed order of integration, the study used the autoregressive distributed lag model. The bounds test showed a longrun association between the studied variables. The error correction model showed a strong and positive association between administrative and economic services and the rate of economic growth in Nigeria.