Sectoral Effect of Government Spending on Economic Growth in Nigeria
The paper examined the effects of government spending on health care and agriculture on economic growth in Nigeria from 1981-2016.Government expenditure is essential through which economic growth could be achieved. We used the quasi-experimental research approach and the data for analysis were purely time series econometrics technique to examine the short and long run effects of government spending on economic growth in Nigeria. The study utilized the Error Correction Model (ECM) and the ADF Unit Root Test was conducted to test for Stationarity of variables, where at various levels of significance (1%, 5%, and 10%), the variables were stationary. That is, RGDP, EXHTH and EXAGR were integrated at order one 1(1). Granger Causality Test to ascertain the direction of the effect of the variables was also conducted. The results showed a unidirectional causality between the EXHTH and RGDP as well as EXAGR and RGDP. Meaning, that total spending on agriculture and total spending on health care granger causes economic growth in Nigeria during the period of study. The result of the analyses is an indication that government spending on health care and agriculture in Nigeria are statistically significant and are positive to economic growth in the long run. Therefore, the paper concludes and recommends that government in Nigeria should increase its expenditure on health care services delivery and agriculture in order to accelerate real economic growth, especially as the economy is gradually exiting recession.
Keywords - Economic Growth, Agriculture, Error Correction Model, Health Care. Public expenditure