This study attempts to empirically examine the role of public sector in revitalizing the Nigeria economy over the last three decades (1981-2011). This is justified on the basis that over the years there has been a persistent rise in government expenditure in Nigeria and, the huge government expenditure has not translated into any reasonable growth and development as the country is still ranked as one of the poorest in the world. The study used econometrics model with Ordinary Least Square (OLS) technique to capture the relationship between government expenditure and the standard of living of Nigerians by using per capita income (PCI) to proxy standard of living, and both total capital expenditure (TCAP) and total recurrent expenditure (TRE) to proxy government expenditure. Other variables are inflation rate and exchange rate. The result of the study shows that total recurrent expenditure and exchange rate are the only variables that significantly influence standard of living in Nigeria. While total recurrent expenditure exerts positive influence on standard of living, the influence of exchange rate is negative. The study reveals that public spending in Nigeria to a larger extent has not been productive and sustainable. The fiscal policy has not satisfactorily fulfilled its target and goals over the period of the study.  One of the major recommendations is that allocation of government spending needs to be based on the level of need and the versatility of individual sectors.



Government Expenditure, Standard of Living, Recurrent Expenditure, Exchange rate.

Full Text:



Agarwala, R. (1983), „Price Distortions and Growth in Developing Countries‟, World Bank Staff Working Papers, No. 575, Management and Development Series, No.2,

Washington, D.C. Altar, M. and Samuel, J. (2004), „Fiscal Policy, Public Capital and Economic Growth‟, 58th International Atlantic Economic Conference, Chicago, USA. October 7-10.

Barro, R. J. (1991a), „A Cross-Country Study of Growth, Saving and Government‟, in B. D. Bernheim and J. B. Shoven eds., National Saving and Economic Performance, Chicago, IL: University of Chicago Press.

Barro, R. J. (1990), „Government Spending In A Simple Model of Endogenous Growth‟, Journal of Political Economy, .XCVIII, S103-25.

Barro, R. J. (1991b), „Economic Growth in a Cross-Section of Countries‟, The Quarterly Journal of Economics, May, 407-43.

Bhagwati, J. N. (1982), „Directly Unproductive Profit-Seeking DUP Activities‟, Journal of Political Economy, 90(5), 988-1002.

Bhagwati, J. N. (1985), Investing; Esmee Fairbain Lecture.

Chude A, (2013), Government Expenditure, Governance and Economic Growth. Comparative Economic Studies, 51(3):401-418.

Engle, R. F. and Granger, C. W. J. (1989): Cointegration and Error Correction: Representation, Estimation, and Testing. Econometrics, 55,. 251-276

Easterly W, Rebelo S, (1993), Fiscal Policy and Economic Growth: An Empirical Investigation. Journal of Monetary Economics, 32: 417-458.

Erkin B, (1988), Government Expenditure and Economic Growth: Reflections on Professor Ram’s Approach, A New Framework and Some Evidence from New Zealand Ti Series Data. Keio Economic Studies, 25(1): 59-66.

Fajingbesi, A. A, and Odusola, A. F, (1999), “Public Expenditure and Growth. A Paper Presented at a Training Programme on Fiscal Policy Planning Management in Nigeria, Organized by NCEMA, Ibadan, Oyo State, 137-179.

Folster S, Henrekson M, (2001), Growth Effects of Government Expenditure and Taxation in Rich Countries. European Economic Review, 45 (8): 1501 -1520.

Goetz, (1977), Optimal Levels of Spending and Taxation in Canada, In Herbert Grube eds. How to use the fiscal surplus Vancouver: The Fraser Institute, 53-68.

Gujarati, D.N. and Porter, D.C. (2009), Basic Econometrics, New York: McGraw-Hill.922p

Gbosi, A. N. (2002). Contemporary Issues in Nigeria Public Finance and Fiscal Policy. Port Harcourt: Pam Unique Publishers.

Gbosi, A. N. (1993). Monetary, Economic and the Nigerian Fiscal System. Port Harcourt: Pam Unique Publishers.

Gregorous, (2007), Optimal Levels of Spending and Taxation in Canada, In Herbert Grube eds. How to use the fiscal surplus Vancouver: The Fraser Institute, 53-68.

Gujarati, D.N. and Porter, D.C. (2009), Basic Econometrics, New York: McGraw-Hill.922p

Iyoha A. M. (2002), Macroeconomics: Theory and Policy. Mareh Publishers Benin City, Nigeria. First Edition.

Ighodaro, C.A.U and Okiakhi, D.E. (2010): Does the Relationship Between Government Expenditure and Economic Growth Follow Wagner’s Law in Nigeria?. Annals of University of Petrosani Economics,. 10(2),185-198.

Jhingan, M. L. (2000). The Economics of Development and Planning. Delhi: Vrinda Publication Limited.

Johansen, S. and Jesulius, K. (1990): Maximum Likelihood Estimation and Estimation and Inference on Cointegration: with Applications to the Demand for Money.

Nijkamp, M. A. (2004): Impact of government Sectoral Expenditure on Economic Growth. Journal of Economics and international Finance, 3(11).

Maku, O. E (2009) Does Government Spur Economic Growth in Nigeria? MPRA Paper No.17941.

Musgrave, R. A., & Musgrave, P. B. (1980). Public Finance in Theory and Practice. USA: Mc-Graw Hill International Company.

Kibert, C. 2005. Sustainable Construction: Green Building Design and Delivery. John Wiley & Sons. Hoboken, New Jersey.

Martin County Countywide Community Redevelopment Plan, March 2001.

Miles, M., Berens, G., & Weiss, M., 2005. Real Estate Development: Principles and Process, Third Edition. Urban Land Institute. Washington D.C.

Schmitz, A. 2004. Residential Development Handbook, Third Edition. Urban Land Institute, Washington D.C.


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.