Public Sector Expenditure and Economic Development in Nigeria

Abstract Motivated by the need to predict economic development through the various expenditure types of the government, the study covers government recurrent and capital expenditure over the period of 1981 - 2023. The study employed time series secondary data obtained from the Central Bank of Nigeria’s Statistical Bulletin. Stationarity/unit root, cointegration, lag-length selection criteria, and error correction tests were employed. The findings revealed that Nigeria’s human development index (proxy for economic development) is most sensitive to variations in recurrent expenditure among all the explanatory variables in the study. Both expenditure patterns are valuable in explaining variations in Nigeria’s economic development. The study recommended that there should be proper monitoring of the projects by the supervising agencies to safeguard these expenditures against abandonment and the Nigerian government should increase expenditures in education for the enhancement of human capital development for overall economic development in Nigeria. Proper project monitoring should be embarked upon by the executive to safeguard these huge expenditures and avoid project abandonment. The government should set a national plan for agricultural development as it has great potentials to generate massive employment through the value chain for the improvement of the country’s economic development.