Efficacy of Public Spending and Economic Growth: The Nigeria Experience (1980–2024)

This paper investigates the efficacy of public spending in stimulating economic growth in Nigeria for the period 1980–2024. Drawing on theoretical growth models and a broad empirical literature on government expenditure and growth linkages, the study develops a time-series framework to evaluate whether and how different types of public spending, capital and recurrent, have contributed to growth over four decades characterized by oil booms, structural reforms, and macroeconomic volatility. The study uses cointegration techniques, Autoregressive Distributed Lag (ARDL) bounds testing, along with policy-relevant interpretations rooted in Nigeria’s fiscal history, recent macro-fiscal reforms and the 2024 GDP rebasing. The dependent variable used is GDP while CEX, REX, and EXR served as independent variables. The study found that there is a positive and significant relationship between GDP and public expenditures while there is negative but insignificant relationship between GDP and exchange rate over the period. It is recommended that the government can boast the GDP by increasing the public expenditures while keeping the exchange rate stable.