EFFECT OF CAPITAL EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA (1986-2016)

EFFECT OF CAPITAL EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA (1986-2016)

ABSTRACT

The study investigated the effect of capital expenditure on economic growth in Nigeria from (1986 to 2016). The variables of Capital Expenditure on road network, capital expenditure on agriculture, capital expenditure on health and capital expenditure on education were regressed on gross domestic product in Nigeria over the period 1986 to 2016. Econometric techniques, including Augmented Dicker Fuller and Philip Perron tests for unit roots and ordinary least square (OLS) were used for the data analysis. The result of the study indicates that capital expenditure on road network, capital expenditure on agriculture, capital expenditure on health has positive and significant effect on gross domestic product while capital expenditure on education has negative and insignificant effect on gross domestic product. The study thus concludes that capital expenditure has positive effect on economic growth in Nigeria within the period under review. The study recommends that government should increase its spending on roads and other infrastructures, activities and encourage and support agricultural sector since it has positive and significant effect on economic growth. Government should increase its expenditure on economic services such as health, education, agriculture, road construction, communication, power generation and other economic services.