Government spending and economic growth: evidence from Nigeria

This study examines the relationships and dynamic interactions between government capital and recurrent expenditures and economic growth in Nigeria over the period 1961 to 2010. Real Gross Domestic Product (RGDP) was used as a proxy for economic growth in the study.The analytical technique of Vector Error Correction Model and Granger Causality were exploited. Based on the result findings, it is evident that the Wagnerian and Rostow-Musgrave hypothesis were applicable to the relationship between the fiscal variables used in this study in Nigeria. The study therefore recommended among others that: there should be effective channeling of public funds to productive activities, which will have a significant impact on economic growth; there should be joint partnership between the government and the private sector in providing essential infrastructural services that will promote economic growth and development, etc.