THE IMPACT OF GOVERNMENT CAPITAL EXPENDITURE ON MANUFACTURING SECTOR OUTPUT IN NIGERIA, (1981 – 2016)

THE IMPACT OF GOVERNMENT CAPITAL EXPENDITURE ON MANUFACTURING SECTOR OUTPUT IN NIGERIA, (1981 – 2016).

ABSTRACT

The study set out to explore the impact of government capital expenditure on manufacturing sector output in Nigeria using time series data from 1981 to 2016. The study employed Descriptive Properties of the Variables, Diagnostic Test, Augmented Dickey-Fuller (ADF) Unit Root Tests, Co-integration Test for ARDL Bounds Test, ARDL approach for the estimation of long-run co-efficient as well as Error Correction Model (ECM) for the short-run dynamics and Test of Hypotheses with Multiple Regression Model using E-view 9 output.  The research findings revealed that capital expenditure on road infrastructure has positive significant relationship with manufacturing sector output in Nigeria in the short – run while in the long – run it has negative and insignificant impact on manufacturing sector output in Nigeria; Capital expenditure on health has positive significant impact on manufacturing sector output in Nigeria in the long-run while in the short – run; it has negative but significant impact on manufacturing sector output in Nigeria; Capital expenditure on telecommunication has positive significant impact on manufacturing sector output in Nigeria both in the long-run and short –run; Capital expenditure on power supply has negative and insignificant impact on manufacturing sector output in Nigeria both in the long – run and short – run. Finally, we also discovered that our model used in this study was found to be econometrically, economically and statistically robust and result driven for impact analysis of the government capital expenditures on growth of the GDP through manufacturing sector output in Nigeria. The study recommended that, Government should increase spending on road and most especially on health and telecommunication infrastructures, particularly on capital expenditure. Serious effort should be made by the government to fix power supply since it holds the key to sustainable rapid economic growth and diversification of the national economy through the manufacturing sector output in Nigeria.