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Impact of Government Expenditure

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Impact of Government Expenditure
IJMBS Vol. 2, ISSue 2, AprIl - June 2012

ISSN : 2230-9519 (Online) | ISSN : 2231-2463 (Print)

Government Spending on Road Infrastructure and Its
Impact on the Growth of Nigerian Economy
1

Nworji I. D., 2Oluwalaiye O. B

Dept. of Accounting, Babcock University, Ogun State, Nigeria
Dept. of Economics, Banking and Finance, Babcock University, Ogun State, Nigeria
1

2

Abstract
The study examined the impact of government spending on road infrastructure development on economic growth in Nigeria for the period 1980-2009. The study employed multiple regression analysis model specified on the basis of hypothesised functional relationship between government spending on infrastructure development and economic growth. Indicators used for government spending are values for defence, transport/communication, and inflation rate as the explanatory variables, while gross domestic product constituted the explained variable. The model for the study was estimated using the Ordinary Least Square (OLS) technique, and further evaluation was carried out using the coefficient of determination to explain the variations between the dependent and independent variables. The outcomes showed that transport and communication, including defence, individually exerted statistically significant impact on the growth of the economy; however, inflation exerted positively but statistically in the period reviewed. However, the variables jointly exerted statistically significant impact on the growth of the economy. Additionally, the model exhibited a very high explanatory power. Based on the findings the study recommended that better co-ordination in the terms of private participation in funding and maintenance of road infrastructure could further enhance the growth of the economy.
Keywords
Nigerian Economy, Growth, Road Infrastructure, Government
Spending
I. Introduction
The issue of government intervention in resource allocation arose due to the failure of


References: Niser Monograph series 3, Ibadan. NISER, 1999. of Administrative Science 12(2) pp. 173-191, 2000. [3] Abu Nurudeen, Abdullahi Usman,"Government Expenditure and Economic Growth in Nigeria", 1970-2008: A Disaggregated Analysis, Business and Economic Journal, 2010. Financial Review, 2005. Econometrics pp. 1187-1193, 2002 w w w Zealand’s Road infrastructure Sydney", 2003. Saudi-Arabia. India Economic Journal, 2000 [8] Anyanwu, C.M., Adebusuyi, B.S., Kukah S.T.Y.,"Highway maintenance in Nigeria", lesson from other Countries A CBN Research Department Occasional paper 27, 2003. [10] Barro, R.,"Economic Growth in Cross Section of Countries", Quarterly Journal of Economics, 1991. Infrastructure In Sub Sahara Africa, Patterns,Issues and Options, 2008. 1, Zenith Bank Plc, 2008. Initiative, 2005. [16] Engen, E. M. And Skinner, J.,"Fiscal Policy and Economic Growth NBER Working Paper", 1992. Policy Planning Management in Nigeria Ibadan, NCEMA, 1999. Annual Conference of the Zonal Research Unit (organised by CBN Research Department in Kaduna), 1999. Economic Review 45(s), 2001. Economic, Vol. 30, 1998. [21] Heggie, Ian G.,"Commercializing Africa roads: Transforming the role of Public Sector", World Bank, 1994. on Transport Policy) proceedings of a Regional Seminar held in Manila Philippines, 21-28 Feburary, 1989. [23] Kweka, J.P, Morrissey,"Government Spending and Economic Growth", Empirical Evidence From Tanzania (1965-1996) DSA Annual Conference Inc New Haven, 1999. Journal (35), 1986. [25] NEEDS,"National Development and Planning Abuja", 2004. Economic Governance Programme, 2007. [27] Owen W. ,"Transportation and World Development", London Hutchinson, 1987. of Development alternatives, 1993.
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