Government Recurrent Expenditure Effect on Economic Growth: Evidence from Expenditure on some Selected Variables

Callistar Kidochukwu Obi ()
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Callistar Kidochukwu Obi: Delta State University

Acta Universitatis Danubius. OEconomica, 2020, issue 16(1), 228-237

Abstract: The study investigated into the effect of some selected government recurrent expenditure on economic growth, with emphasis on social and community services, economic services and transfers. In a modern economy, government perform two functions; economic and non-economic. Studies have shown that developed countries focus more on transfers and subsidies, while developing economies pay more attention on social and community services. For the Nigerian state, government performed these functions religiously, and available statistics showed that government spend more on recurrent goods and services, specifically on transfers, than capital goods and services and this has implication on growth. The study adopted Vector Error Correction Model technique. Other preliminary tests were conducted. From the empirical result, it was evident that economic services and social and community services are not growth drivers of the Nigerian state. The implication of this finding is that government efforts on improving the lives of its citizens has not translated into growth. It was recommended that government should make effort to also allot funds to capital expenditure in such a way that there would be no much significant difference between capital and recurrent spending as this would improve the lives of the citizens on the one hand, and influence the growth rate of the economy on the other.

Keywords: Economic functions of government; Recurrent expenditure; Social and community services; Transfers; Economic growth (search for similar items in EconPapers)
Date: 2020
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