ANALYSIS OF SOCIAL EXPENDITURE AND ECONOMIC GROWTH IN NIGERIA
Keywords:
Health expenditure, Education expenditure, Social expenditure, Economic growth.Abstract
This study investigated the impact of social expenditure (expenditure on education and health) on economic growth in Nigeria for the period 1989-2020. Secondary data were collected from World Bank Development Indicators and the Central Bank Statistical Bulletin (2021). The variables used include real GDP, education expenditure, health expenditure, inflation rate, debt service payment, real interest rate and real exchange rate. To check if the variables were stationary, unit root test was carried out and cointegration analysis was done to ascertain the existence of long run relationship between the variables and economic growth in Nigeria. The Autoregressive Distributive Lag model (ARDL) was used to estimate the model and the error correction model was used as well to identify the short run effect of social expenditure on economic growth. Based on the objectives of the study, the empirical evidence revealed that health expenditure in the long run, had a positive and significant impact on economic growth. However, for the period under consideration, education expenditure had a significant negative impact on Nigeria's economic growth. This study also investigated the short-run impact of social expenditure on economic growth in Nigeria, and it was found empirically that only health expenditure had a significant positive impact on economic growth, while education expenditure had significant negative impact on growth. In line with these findings, the educational system should be supervised to guarantee that funding intended for education are used appropriately. Finally, since health expenditure has a major positive effect on economic growth, the government of Nigeria must double its budgetary allocation to the sector.
JEL Codes: I1, I2, P24
References
Abayomi, A. (2012). Education budget and its implications (Analysis). Vanguard Newspaper.
Adamu, P.A. (2003). The Impact of Human Capital formation on Economic Development in Nigeria: An Error correction Approach. In: Human Resource Development in Africa: Selected Papers for the Year 2002 Annual Conference, The Nigerian Economic Society (NES), Part Two, pp.53-77.
Agiobenebo T.J. (2003), Public Sector Economics: Theories, Issues and Applications. LIMA Computers, Port Harcourt.
Akwe, J. A. (2014), “The relationship between public social expenditure and economic growth in Nigeria: An empirical analysis”, International Journal of Finance and Accounting, Vol. 3 No.3, pp.185-191.
Bakare, A.A. and Olubokun, S. (2011), “Health care expenditure and economic growth in Nigeria: An empirical study”, Journal of Emerging Trends in Economics and Management Sciences, Vol.2 No.2, pp. 83-87.
Chandra, A. (2010), “Does Government Expenditure on Education Promote Economic Growth? An Econometric Analysis”, Jamia Millia Islamia (Central University), New Delhi. MPRA Paper No. 25480.
Chude, N. P. and Chude, D. I. (2013), “Impact of government expenditure on economic growth in Nigeria” International Journal of Business and Management Review, Vol.1 No.4, pp. 64-71.
Domar, E. D. (1946), “Capital expansion, rate of growth, and employment”, Econometrica, Journal of the Econometric Society, Vol. 14, pp. 137-147.
Elmi, Z. M. and Sadeghi, S. (2012), “Health care expenditures and economic growth in developing countries: Panel co-integration and causality”, Middle-East Journal of Scientific Research, Vol.12 No.1, pp. 88-91.
Emran, M. H, Shilip, F., Alam, M. I., (2007), “Economic liberalization and price response of aggregate private investment, Time series Evidence from India”, Canadian Journal of Economics, Vol. 40 No.3, pp.914-934.
Ezirim C.B. (2005). Finance Dynamics: Principles, Techniques and Application 3rd Edition Markowitz Centre for Research and Development University of Port Harcourt.
Harrod, R. F., 1939, “An Essay in Dynamic Theory”, Economic Journal, Vol.49 No.2, pp.14.
Jhingan, M.L. (2010), Macro-Economic Theory (12th ed.). Delhi: Vrinda Publications (P) LTD.
Hartshorne, K.B. (1985), “Education and development in the South African context”, Development Southern Africa, Vol. 2 No. 2, 1985.
Hussin, M. Y. M., Muhammad, F., Hussin, M. F. A. and Razak, A. A. (2012), “Education expenditure and economic growth: A causal analysis for Malaysia”, Journal of Economics and Sustainable Development, Vol.3 No.7, pp. 71-81.
Keynes, J. M. (1936), “The General Theory of Employment, Interest and Money”, New York: Harcourt Brace, 113-115.
Lukasz, P. (2014), “Review of theories and models of economic growth”, Comparative Economic Research, Vol.17 No.1, pp. 46-60.
Lutkepohl, H. (2005), New Inroduction to multiple time series analysis, Berlin: Springer Publishers.
Mandiefe, S. P. and Chupezi, J. T. (2015), “Contribution of public health investments to the economic growth of Cameroon”, Business And Economics Journal, Vol.6 No.4, pp. 1.
Narayan, (2005), “The Saving and investment nexus for China: Evidence from co-integration tests”, Applied Economics, Vol. 37 No.17, pp. 1979-1990.
Nwodo, O. S. and Ukaegbu, C. (2017), “Public social expenditure mix and economic growth in Nigeria”, Journal of Economics and Sustainable Development, Vol. 8 No.11, pp. 29-37.
Nwodo, O.S. and Asogwa, F. O. (2017), “Global integration, non-oil export and economic growth in Nigeria”, Academic journal of economic studies”, Vol.3 No.1, pp. 59-67.
Ohwofasa, B. O., Obeh, H. O. and Atumah, M. (2012), “Impact of government expenditure in education on economic growth in Nigeria, 1986-2011: A Parsimonious Error Correction Model”, African Journal of Scientific Research, Vol.10 No.1, pp. 587-898.
Ojewumi J. S and Oladimeji W. O. (2016), “Effect of public spending on the growth of educational sector in Nigeria”, JORIND, Vol.14 No.2.
Olajide, O.T. Akinlabi, B.H. and Tijanim A.A. (2013), “Agricultural resource and economic growth in Nigeria”, European Scientific Journal, Vol.8 No.22, pp. 103-115.
Olayiwola, A.O. (2007), Procedures in Educational Research, Henijam Publications, Kaduna, Nigeria.
Oni, L. B. (2014), “Analysis of the growth impact of health expenditure in Nigeria”, IOSR Journal of Economics and Finance, Vol. 3 No.1, pp.77-84.
Orji A. (2014), “Analysis of Financial Openness and Macroeconomic Performance in Nigeria, 1986-2011” A Ph.D Thesis submitted to the Department of Economics, University of Nigeria, Nsukka. Retrieved from www.unn.edu.ng on 17/07/15.
Owusu, E. (2012), “Financial Liberalization and Economic Growth in ECOWAS countries. Unpublished PhD Research Work
Peacock, A.T., Wiseman, J. (1961), The Growth of Public Expenditure in the United Kingdom, London: Oxford University Press.
Pesaran, H. M and Shin, Y. (1999), An autoregressive distribute lag modeling approach to co-integration analysis. Chapter 11 in Econometrics and Economic Theory in the 20th Century. The Ragnar Frisch centennial symposium. Cambridge University Press: Cambridge.
Pesaran, H. M., Shin, Y. and Smith, R. J. (2001), “Bounds testing approaches to the analysis of long run relationships”, Journal of Applied Econometrics, Vol.16, pp.289-326.
Pesaran, M. and Pesaran B. (1997), Working with Microfit 4.0: Interactive Econometric Analysis. Oxford, Oxford University Press.
Rajkumar, A. S. and Swaroop, V. (2004), Public Spending and Outcomes: Does Governance Matter? World Bank Working Papers No. 2840, Washington: World Bank Retrieved: http://www.vanguardngr.com/ 31st August, 2016.
Romer, P.M. (1990), “Endogenous technological change”, Journal of Political Economy, Vol.98 No.5, pp. 71-102.
Saibu, F. M. (2014), “Capital inflow and economic growth nexus in Nigeria: The role of trade openness.”, Acta Universitatis Danubius”,Vol.10 No.6, pp.98-112
Sakthivel, P. and Inder Sekhar, Y. (2007), “Causality between public expenditure and national income in India: A Reexamination”, The ICFAI University Journal of Public Finance, Vol. 5 No.4, pp. 36-51.
Umo J. U. (2012), Economics: An African Perspective. Millennium Text Publishers Limited, Plot 6B, Block 22, Humanities Road, Unilag Estate, Magodo, Isheri Lagos Nigeria.
Usman, A., Mobolaji, H. I., Kilishi, A. A., Yaru, M. A. and Yakubu, T. A. (2011), “Public expenditure and economic growth in Nigeria”, Asian Economic and Financial Review, Vol.1 No. 3, pp.104-113.
Victor, O. N. (2015), “Education expenditure and economic growth: Evidence from Ghana”, Journal of Economics and Sustainable Development, Vol.6 No.16, pp. 69-77.
World Bank (2002), Achieving universal primary education in Uganda: the ‘’Big Bang’’ approach. Education Notes (Washington).
World Health Organization. (2013), Statistical Information System. World Health Organization, WHO: Geneva. http./www.who.int/whosis/en.
Yesufu, T.M. (2000), The Human Factor in National Development: Nigeria. Ibadan: Spectrum Books
Published
How to Cite
Issue
Section
Copyright (c) 2024 Agholor, Sozorchukwu Jason, Emmanuel T. Ideba, Anthony Orji, Onyinye I. Anthony-Orji, Jonathan E. Ogbuabor, Ndubuisi Isaac
This work is licensed under a Creative Commons Attribution 4.0 International License.
