Government Spending on Infrastructure and Economic Growth in Nigeria (1986–2025)

This study investigates the relationship between government spending on infrastructure and economic growth in Nigeria over the period 1986 to 2025. Using a robust multi-variable time series framework, the research incorporates nine control variables, inflation rate, exchange rate, oil prices, population growth rate, urbanization rate, governance quality, corruption index, private sector investment, and foreign direct investment, to isolate the independent effect of infrastructure expenditure on real GDP growth. Employing Ordinary Least Squares (OLS), Dynamic OLS (DOLS), Fully Modified OLS (FMOLS), and the Autoregressive Distributed Lag (ARDL) bounds testing approach, alongside rigorous post-estimation diagnostics including Johansen cointegration, CUSUM stability tests, and heteroskedasticity corrections, the study finds a statistically significant and positive long-run relationship between infrastructure spending and economic growth (coefficient: 0.528; p < 0.01). The results are robust across all estimation methods. Governance quality and private sector investment emerge as significant complementary drivers, while inflation and corruption consistently dampen the growth effect of infrastructure outlays. These findings challenge the conventional fiscal austerity narrative and provide strong empirical grounds for sustained, well-governed infrastructure investment in Nigeria. The study contributes to the literature by offering the most current and comprehensive empirical assessment for Nigeria, extending previous datasets by a decade and incorporating governance-corruption interaction dynamics that earlier studies omitted.