Tansian University Journal of Arts, Management & Social Sciences

This study examined the effect of public expenditure on economic growth in Nigeria, with emphasis on expenditure distribution, composition, and efficiency. Using an ex post facto research design, time series data from 1999 to 2022 were analyzed with descriptive statistics and a Vector Error Correction Model (VECM). Results show that recurrent expenditures accounted for approximately 71.97% of total government spending, while only 21.51% was allocated to capital expenditures. Further disaggregation revealed that administrative services absorbed 26.19% of capital outlays, economic services 46%, social and community services 12.72%, and transfers 14.99%. The relatively low investment in social and community services including education, health, and environmental development suggests underfunding of sectors critical to sustainable growth. Despite the dominance of recurrent spending, both capital and recurrent expenditures were found to have a positive effect on economic growth. The study recommends a rebalancing of expenditure priorities by optimizing recurrent spending, reducing debt servicing burdens, and increasing allocations to growth-enhancing capital investments.

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