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
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
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