Impact of government spending in education and health sectors on Nigeria’s economic growth: a time series analysis of capital and recurrent expenditures

Abstract

This paper provides an in-depth exploration of the Impact of Government Spending in Education and Health on Nigeria’s Economic Growth: a time series analysis of capital and recurrent expenditures from 1986 to 2023, using time series data and the Autoregressive Distributed Lag (ARDL) model. The study reveals that past GDP per capita significantly influences current output, indicating growth momentum. Government capital education expenditure (GCEEX) has a complex relationship, with short-term spending slightly negative but becoming positive in the long term. Capital health expenditure (GCHEX) contributes positively, while recurrent education expenditure significantly boosts GDP per capita in both short and long terms. Recurrent health expenditure, on the other hand, negatively impacts GDP per capita due to inefficiencies or crowding-out effects on private investment. The study further recommends Investing in educational infrastructure, vocational training centers, and technological resources is crucial for long-term economic growth. The Ministry of Education should prioritize these investments, while the National Planning Commission should coordinate long-term capital allocations. The Ministry of Health should prioritize infrastructure investments and oversee partnerships, while the Public-Private Partnership Commission should facilitate implementation. Consistent funding for teacher salaries, curriculum development, and training programs is vital for fostering a learning environment and building human capital. Addressing potential inefficiencies in recurrent health spending is also essential, with a comprehensive audit by the Ministry of Health and Auditor General.