Journal of Emerging Trends in Economics and Management Sciences: Home

Abstract:
We explore the relationship between the composition of public expenditure and economic growth in Nigeria. Government expenditure is expected to be means of reducing the negative impacts of market failure on the economy. However, allocations of public expenditure with lack of consideration for the urgent needs of the country may engender greater distortion in the economy which may be detrimental to growth. To this end, we have analyzed the relationship between public expenditure compositions from 1960 to 2008 on economic growth using the vector Autoregressive models (VAR). The finding shows that expenditure on education has failed to enhance economic growth due to the high rate of rent seeking in the country as well as the growing rate of unemployment. We also noted that expenditure on health and agriculture should be encourage due to their positive contributions to growth while further studies is necessary to identify empirically why public expenditure on water and education are negatively related with growth.

Keywords: public expenditure, composition, economic growth, investment, Nigeria.

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