Abstract

Author:

Agama Omachi, Onum Friday Okoh

Doi: 10.26480/seps.02.2025.34.38

This is an open access article distributed under the Creative Commons Attribution License CC BY 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

This study evaluates the effect of government public spending on economic growth in Nigeria for the period 1990 to 2023, focusing on critical areas such as education, health, and the military. Given the fundamental importance of fiscal policy in determining macroeconomic performance, the research explores how allocations to various sectors have impacted the country’s GDP using the Autoregressive Distributed Lag (ARDL) model. After ensuring stationarity using unit root tests, time series data on government spending on the military (EXPMLT), health (EXPHLT), and education (EXPEDU) were examined, with GDP serving as the dependent variable. The ARDL estimation results show a complex relationship: military spending has a strong and statistically significant negative effect on economic growth, suggesting that excessive spending on defense may be crowding out investment in more productive sectors; health spending has a positive but statistically insignificant relationship with economic growth, suggesting that inefficiencies in healthcare spending may be limiting its full potential; and education spending has a negative and marginally significant effect on GDP, suggesting that while education is essential for human capital development, its returns may take time to materialize. The empirical results highlight how crucial it is to match public spending to developmental priorities in order to promote long-term growth. Investments in the social sector are crucial, but their efficacy is largely reliant on the caliber of the institutions involved, good resource management, and transparent execution. The results imply that Nigeria must raise the quality and efficiency of education and health spending to maximize their developmental benefits, while simultaneously evaluating the quantity and emphasis of military investment. This study offers policy-relevant insights into how Nigeria might restructure its public spending to promote equitable and sustainable economic growth, as well as adding to the larger conversation on the efficacy of fiscal policy in developing nations.