Disaggregated Capital Expenditure and Economic Growth; Evidence from Nigeria

This study examined the effect of federal government disaggregated capital expenditure on economic growth. Data were sourced from Central Bank of Nigeria Statistical Bulletin.1986-2019. Real gross domestic product was modeled as the function of Federal Government capital expenditure on Agriculture, Federal Government Recurrent on Works, Housing and Road Construction, Federal Government Recurrent on Transport and Communication, Federal Government Recurrent Expenditures on Education, Federal Government Recurrent Expenditures on Health and Federal Government Recurrent Expenditures on Defense. The study adopted the ADF Unit Root test, ARDL Bounds Cointegration Test and Autoregressive Distributed Lags (ARDL) was applied for the coefficient estimations. The study found that 99.8% variation in real gross domestic product was traced to capital expenditures as modeled. The long run estimation results revealed that while CAGR, WHR are positive, CTRC, CEDU, CHLT and CDFE showed negative relationship with RGDP. From the finding, we conclude that capital expenditures determine the variation in real gross domestic product in Nigeria. The study recommends that the extent of Capital expenditure on TRC should be sustained based on their positive impacts on national real income. There is need to sustain and increase Capital expenditures on EDU found to contribute positively to RGDP but not significant enough. While Capital expenditure on HLT needs to be sustained, its capital expenditure should be increased to boost the economy and Both Recurrent and Capital expenditures on DFE are found to be contributing positively to the economy and should be sustained.