Public Expenditure and Economic Development in Sub-Saharan Africa: Evidence from Nigeria and Ghana. African Journal of Business and Economic Development

PUBLIC EXPENDITURE AND ECONOMIC DEVELOPMENT IN SUB-SAHARAN AFRICA: EVIDENCE FROM NIGERIA AND GHANA

SAMPSON, IKENNA OGOKE (M.Sc)

A.B.C. AKUJUOBI (Ph.D)

L.E. AKUJUOBI (Ph.D)

NWAIMO C.E. (Ph.D)

NWABEKE CHIDINMA ELIZABETH (M.Sc)

Department of Financial Management Technology,

Federal University of Technology, Owerri,

Imo State, Nigeria

ABSTRACT

This study examined the effect of public expenditure on economic development of Nigeria and Ghana using time series data sourced from Central Bank of Nigeria Statistical Bulletin and Word Bank data base from 1987-2020.  Per capita income was modeled as the function of Nigeria Per capita income, Nigeria capital expenditure on Administration, Nigeria capital expenditure on Economic services, Nigeria capital expenditure on Social services, Nigeria capital expenditure on Transfers, Ghanaian capital expenditure on Education, Ghanaian capital expenditure on health, Ghanaian capital expenditure on Agriculture and Ghanaian capital expenditure as percentage of Gross Domestic Product. Ordinary Least Square (OLS), Augmented Dickey Fuller Test, Johansen Co-integration test, parsimonious vector error correction model and pair-wise causality tests were used to conduct the investigations and analysis. The study found that  66.2 percent variation in per capita income within the periods covered in this study, this implies that while the estimated regression results from Ghana proved that the independent variables can explains 50 percent variation on per capita income. The study concludes that there is significant relationship between capital expenditure and economic development of the two countries under study. It is recommended that government should increase the share of the capital expenditure especially on meaningful projects that have direct bearing on the citizen’s welfare. Capital expenditures on economic services should be directed mainly at the agricultural sector so as to stimulate activities in the economic sectors and, perhaps, reverse the negative effect on economic development.

Keywords: Public Expenditure, Economic Development, Sub-Saharan Africa, Nigeria and Ghana

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Sampson, I.O; Akujuobi, A.B.C; Akujuobi, L.E; Nwaimo, C.E & Nwabeke, C.E (2021). Public Expenditure and Economic Development in Sub-Saharan Africa: Evidence from Nigeria and Ghana. African Journal of Business and Economic Development, 1(12), 103-128. Available online at: https://www.ijaar.org/articles/articles/ajbed/v1n12/ajbed-v1n12-Dec21-p11215.pdf

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