THE IMPACT OF PUBLIC EXPENDITURE ON INFRASTRUCTURAL AND ECONOMIC DEVELOPMENT IN NIGERIA (1986-2022)

The paper examined the impact of public expenditure on infrastructural and economic development in Nigeria from 1986-2022). The study was a time series thereby employing Secondary data sourced from the Central Bank of Nigeria (CBN) Statistical bulletin 2022. The data were subjected to unit root diagnostic test to determine whether they are stationarity or otherwise. The data were integrated of order 1(0) and 1(1). Therefore, the Autoregressive Distributed Lag (ARDL) model was adopted, the Error Correction Model (ECM) technique was also adopted to check for the cointegration. The study reported along run relationship between public expenditure on infrastructural and economic development. The result shows that Public expenditures on health and construction infrastructures negatively affect economic development in Nigeria. While public expenditures on education, transportation and communication, and economic and services infrastructures positively affects economic development in Nigeria. The study concludes that pubic infrastructural expenditures influence economic development in Nigeria and the paper recommend that the financing options for closing Nigeria’s infrastructure gaps should focus on broadening the sources of finance and a better allocation of public resources. In this wise, the government should intensify the utilisation of the public-private-partnership (PPP) framework as government alone cannot finance infrastructural development in an emerging market economy like ours. Therefore, Nigeria needs to be more pragmatic in her infrastructural development, in order to create employment and reduce poverty.


Introduction
Nigeria has experienced tremendous regress in macroeconomic performance considering decrease in the average growth from 6% in 2000-2010, to 2.27% in 2019 (National Bureau of Statistics, NBS, 2020).But then, despite the growth experience, the country is grappling with poor and inadequate supply of infrastructure; ranging from perennial electricity outages, housing problems, poor road networks, to inefficient port, rail and air transport logistics, as well as decaying water and sanitation facilities (Umuteme, 2019).To this end, as adult literacy rises from 5.1% in 2008 to 6.2% in 2018, yet human development index (HDI) remains averagely at 0.53 between 2015 and 2020 (HDI, 2020), while 63% of the population live below $1 per day, and unemployment rate at 14.2% in 2016 climbs to 23.1% in 2018 and is expected to rise to 33.5% in 2020 (NBS, 2020).Also, 73.5% of Nigerians cannot access improved drinking water sources and sanitation facilities (UNICEF, 2020) with only 54.4% accessing electricity supply in 2017 as against 59.3% in 2016 (World Bank, 2020).Nonetheless, following Infrastructure Concession Regulatory Commission (ICRC), an estimated $14 billion is required for road rehabilitation and construction, while $20 billion is needed to revamp the power sector, and about $17 billion for rail tracks (Foster & Pushak, 2011).Thus, in this regard, the size of capital expenditure has been on the rise,for instance, from ₦653.61 billion in 2016 to a provisional amount of ₦1682.1 billion in 2018 (Central Bank of Nigeria, CBN, 2018).Regardless the rise in allocation, however, the amount slated for infrastructure is insignificant as, according to Opia-Enwemuche and Oyeneyin (2016), there is an infrastructure gap of about 50% below the international benchmark of 70% of gross domestic product (GDP).It is on this background this study finds relevance in contributing to the discussion on infrastructure development.Meanwhile, irrespective of raging discussion on the relationship linking infrastructure development and economic growth, few studies which include Eke (2014), Oyinloye (2014), andYikudi (2014) have examined the effect of debt and bonds on infrastructure in Nigeria,while Kolawole (2019) affirms the efficacy of government spending in propelling road infrastructure in West Africa.The Nigerian government spends money on infrastructure projects such as education, defense, general administration, health, water supply, electricity generation and supply, roads, and telecommunications.Despite this, the country's infrastructure development has not improved as much as expected and the citizens' standard of living remains low.Scholars around the world have discussed the impact of government spending on infrastructure development in Nigeria, yet the poor infrastructure in the rural areas persist.After all, the Central Bank of Nigeria revealed there was increased government expenditure on infrastructure from ₦8 billion to ₦2,522 billion in 2021 (CBN, 2021).However, the gap still exist as there are yet no proof to confirm if government expenditure has translated into meaningful development in the transport, health, and education sectors.This sectoral approach is adopted so as to broadly analyse the impact government spending on these selected sectors has on economic growth in Nigeria by providing specific answers to the following question: What impact does government spending on the transport, communication, health, education, construction and economic services have on Nigeria's economic growth?To achieve our aim, the paper is structured as follows: Following the introductory section is the review of extant literature, research methods, result presentation,analysis, and discussion, while the paper concludes with some policy recommendations.

Conceptual Clarifications.
2.1 Government Expenditure Government expenditure, according to Nnamocha (2008), is the expenditure of the public sector (government).It includes such expenditure on the maintenance of government itself and also for the society and the economy.The rising trend in the growth of public expenditure is a worrisome development to the traditional Economist like the classical theorist who believed that government roles in the economy should be minimal because the extolled the virtue of the "invisible hand" through the working of market mechanism Government Expenditures are the expenses which a government incurs for (i) its own maintenance (ii)society and the economy (iii) helping other countries (Bhatia 2002).Public expenditure represents the total government spending to attain the predetermined macro-economic objectives.Governments have recorded a continuous increase over time in almost every country.Government spending as a fiscal instrument serves useful roles in the process of controlling inflation, unemployment, depression, balance of payment equilibrium and foreign exchange rate stability.In the period of depression and unemployment, government spending causes aggregate demand to rise and production and supply of goods and services follow the same direction.As a result, the increases in the supply of goods and services couple with a rise in the aggregate demand exalt a downward pressure on unemployment and depression.

Concept of Economic growth
Anyiwe and Oziegbe (2020) opined that economic growth connotes increase in outputs in various sectors, national product, national income, improved level of technology, health, education and urbanization.In addition, economic growth refers to as a long term rise in its capacity to supply increasingly diverse economic goods to its population.It is also a process by which the productive capacity of the economy is increased over time to bring about rising level of national output and income.On the other hand, economic growth is a long term process wherein the substantial and sustained rise in real national income, total population and real per capita income takes place.In addition, economic growth is the expansion of the system in one or more dimensions without a change in its structure.Thus economic growth is related to a quantitative, sustained increase in the country s per capita output or income accompanied by expansion in its labour force, consumption, capital and volume of trade (Ukwueze, 2018).Government policies can be targeted toward enhancing the economic growth rates by taxing consumption, subsidizing investment and research, and shifting resources from government consumption to government investment and provide the enabling environment for private sector to drive the growth.However, government policies can deter the level of economic growth, for instance, government borrowing to finance recurrent expenditure, high tax rate for companies, lack of investment in capital stock, high exchange rate and interest rate.

Infrastructure
Infrastructure is the set of facilities and systems that serve a country, city, or other area,and encompasses the services and facilities necessary for its economy, households and firms to function, Sheffrin, Steven M. (2019).Infrastructure is composed of public and private physical structures such as roads, railways, bridges, tunnels, water supply, sewers, electrical grids, and telecommunications (including Internet connectivity and broadband access).In general, infrastructure has been defined as "the physical components of interrelated systems providing commodities and services essential to enable, sustain, or enhance societal living conditions" and maintain the surrounding environment Jeffrey (2019).

Empirical literature
Nwagwa, 2020).The Johansen co-integration and Granger causality tests for assessing were utilized and the discoveries indicated that education and financial development in Nigeria have a long period co-integration while the Granger causality test discovered that education and gross enrolment proportion of advanced education are not influencing economic advancement and the economic growth isn't impacting the two of them as well.The result is that if Nigeria's system of education continues as it is now, it will stay a drawn out issue and will proceed to influence financial development negatively.Researched on the long-term relationship between higher education and financial advancement of the South Asian states utilizing econometric panel cointegration (Hussaini, 2020).
While Akpan (2020) found no significant impact of government expenditure on economic growth in Nigeria, Odubuasi, Ifurueze and Ezeabasili (2020) employed the autoregressive distributive lag model and found that government capital and recurrent expenditures on highway and safety had positive and significant effects on Nigeria's economic growth.Amadi and Alolote (2020) studied the effects of government infrastructural expenditure on economic development in Nigeria using secondary data for the period 1981 to 2018.Vector error correction model was used with government expenditure on key sectors of the economy such as transport, communication,education, health, agriculture and natural resources as the independent variables whereas economic growth proxied by GDP was the dependent variable.The findings show that government spending on transport,communication, education and health infrastructure had significant positive effect on economic growth while government spending on agriculture and natural resources infrastructure had a significant inverse effect on economic growth in Nigeria.Nurudeen et al, (2021) employed the ordinary least square and Granger causality methods and the results showed a positive and significant impact between government spending and economic growth.Ojo and Ojo (2022) studied Nigeria's health expenditure, education, and economic growth, from 1981 to 2019 using error correction model as an estimating approach with real GDP as the dependent variable and education expenditure index, the health expenditure index, inflation, life expectancy rate, maternal mortality rate and GDP growth as the explanatory variables.The results revealed that government expenditure on education and health has a positive and significant impact on economic growth in Nigeria.Okoli, Nwokoye, and Metu (2022)  Product (RGDP) was used as the dependent variable while capital and recurrent expenditures on administration, economic services, Social and Community Services, Transfers were used as the independent variables.The results show that all the variables were normally distributed according to the descriptive analysis, the regression plane is statistically significant and there exists a statistically significant relationship among the variables employed in the analysis.There is the existence of a longrun relationship among the variables as the result of the Johansen co-integration test indicates six co-integration equation.The study recommended that Government spending if properly managed will raise the nation's production capacity and employment, which in turn increase economic growth in Nigeria.Also government should increase its expenditure on rural development, roads, water and electrification in order to accelerate the level of productivity, increase income and raise the standard of living of poor citizens in Nigeria.Coman et al (2023) wrote on the impact of public education spending on economic growth in Central and Eastern Europe which aimed at analyzing the impact of public spending on economic growth in 11 former communist Eastern European states by analyzing the education sector.The methodology used was ARDL with structural break.The results shows that public education expenditure-economic growth relationship is mixed on long term for five countries where as there is one on a long term for six countries.On a short term also, mixed results manifest for four countries which have positive impact, and two countries with negative outcomes.The study therefore recommends that the government of communist countries should invest heavily into education as this will enable them attain economic growth.Iliyasu and Muhammed (2023) worked on growth effects of government expenditure in Nigeria emphasizing on corruption as a factor.The paper carried out an empirical analysis of direct and indirect links among growth, government expenditure and corruption in Nigeria using annual time series data for the period from 1990 to 2020.The autoregressive distributed lag (ARDL) model was used to explore the longrun interacting effect of corruption on the nexus between growth and government expenditure.The modified ordinary least squares and dynamic ordinary least squares were used as alternative techniques of estimation.The results show that an increase in government expenditure and a reduction in corruption has a significant increasing effect in the shortterm and long-term growth when studied directly but indirectly, reducing corruption enhances the increasing effect of government expenditure on economic growth.The study therefore recommends that attaining sustained growth is possible by raising government expenditure and minimizing corruption.Thus, minimizing corruption associated with increased government expenditure on infrastructure should be a top policy priority for Nigeria to attain economic growth.Aside Okoli, et al. (2022) and Amadi and Alolote (2020) which made attempts at disaggregating Nigeria's infrastructure into its various components, the literature is replete with studies that aggregated this basic factor of economic progress.As such, these studies neglected the need for policy interventions aimed at adopting Hirschman's theory of investing in the critical sectors of the economy that comprise the public infrastructure in the country in order to ensure a trickle-down effect on sectoral growth of the economy.

Theoretical Framework
The theoretical framework for this study is the new growth theory and unbalanced growth theory.According to Hirschman (1958) who postulated the unbalanced growth theory, for developing countries such as Nigeria to witness economic growth, there is need to choose and invest in the critical/key sectors of the economy that comprise the public infrastructure in the country, so that there will then be trickled down effects to other sectors of the economy.This study adopts Hirschman's approach which was used for European countries in the Nigerian context as a robust model to incorporate and empirically examine the impact of government spending on five key selected sectors of the economy.The new growth theory on the other hand holds that economic growth is primarily a result of endogenous (not external) forces.It holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth.The theory also focuses on positive externalities and spill over effects of a knowledge-based economy which leads to economic development and it primarily holds that the long run growth rate of an economy depends on policy measures.Where K is capital, L is labour and A is Technological progress.According to Hirschman, investments in strategically selected industries or sectors of the economy will lead to new investment opportunities and so pave the way for further economic development.Hirschman maintained that development can only take place by unbalancing the economy through investing either in social overhead capital (SOC) or in directly productive activities (DPA).Social Overhead Capital has been defined as comprising those basic services without which primary, secondary and tertiary productive activities cannot function.SOC includes government investments in education, public health, communications, transportation and conventional public utilities like light, water, power, irrigation and drainage schemes, etc. Hirschman unbalanced growth model is specified as Where Y(t) = output from social overhead capital (SOC).ψθ(t) = social overhead capital (SOC) at time t given input requirements.
Equation 3 presents the core sectoral variables and hence is employed to satisfy the objectives of this study.Having looked at the theoretical underpinnings of the impact of government spending for infrastructure on economic growth from a combination of the endogenous growth model and unbalanced growth theory, the task in this section is to construct a model relating the various key variables identified as factors within the context of impact of governments' infrastructural development activities and economic growth.Therefore Equation 1 can be reconstructed as: GDP = f (K, L, SOC).......................( 4) Where SOC was further decomposed into government spending on sectors such as transport, communication, health, education, construction and economic services.

Source of Data
The study is an ex-post factor research.The variables for the study were based on secondary data.The data were sourced from CBN Statistical bulletin, 2021 edition.The time series covers the market based economic era when public expenditures were seen to be the main stand-post of economies across the world.Thus, the data covers 1986 to 2022.Public expenditures on economic services (PEXPES) as the explanatory variables.

Model Specification
The amount of investment on Nigerian infrastructural development is a function of the Nigerian economy and other covariates.To investigate the impact of public expenditure on infrastructural and economic development in Nigeria in the five selected infrastructures on the development of the Nigerian economy.The model adapted for this study is predicated on the endogenous growth framework of Barro (1990)  The mathematical and econometrical form of the model with the variables converted to growth rates is given as: Therefore, equation (1) may be expressed in a linear and log form as:  1 below shows the mean value of RGDP, PEXPH, PEXPE, PEXPTC, PEXPC and PEXPES are; 0.7, 2.3, 2.6, 0.4, 1.1 and 1.8 respectively.PC has the highest level of discrepancy, as shown in the standard deviation result.This means that construction was found to be more volatile and unpredictable having the highest standard deviation of 0.982064.RGDP shows the lowest level with the standard deviation of 0.499027 respectively.Skewness is a measure of the rate of asymmetry or discrepancy of the variables.Accordingly, RGDP, PEXPH, PEXPE, PEXPTC,PEXPES and PEXPC have long left tail.This is because the variables exhibit negative values of -1.4,-0.6, -0.7, -0.6, -0.3, and -0.4 respectively.Kurtosis measures the peakedness and flatness of the series.Thus, the result shows that RGDP is leptokurtic relative to their normal distribution because their value is greater than three, while PEXPH, PEXPE, PEXPTC,PEXPES and PEXPC are platykurtic because their kurtosis values are lesser than three.JarqueBera test of normality is used to see whether the series are normally distributed.The p-value of the JarqueBera test indicated that most of the series are normally distributed.

Testing for stationarity
Following the Granger and Newbold (1977), most time series variables are nonstationary, and utilizing such non -stationary variables in estimation might lead to spurious regression.To overcome this shortcoming, the stationary status of the series using both the Augmented Dickey-Fuller (ADF) was utilized.The ADF test is base on minimizing the Akaike information criterion (AIC).The bandwidth is selected based on the Neweywest approach.2 show that the growth rates of Gross domestic product, public expenditure on health, public expenditure on education, public expenditure on transportation and communication, publication expenditure on construction and public expenditure on economic services.Gross Domestic Product, Public expenditures on health infrastructures,public expenditure on educational infrastructures and public expenditures on economic services were stationary at first difference therefore integrated of order I(1).The unit root results also shows that public expenditures on transportation and communication, and public expenditures on constructions were all stationary at level.Thus, the null hypothesis of no stationarity was rejected for all the variables in favour of the alternative hypotheses which states that there is stationarity for all the variables used in the study.

Autoregressive Distributed Lag (ARDL) Bound Test Result
The long run dynamic relationship among the variables in the model was tested using the ARDL modelling approach in line with Pesaran and Pesaran (1997) procedure.The test (F-statistics) tested for joint (overall) significance of the co-efficient of all the variables in the model.The decision rule is that if the computed F-statistics exceeds the upper bound value I(1), then the null hypothesis is rejected which indicates that there is co-integration.Otherwise, if computed F-statistics falls below the lower bound value I(0), the null hypothesis of no co-integration is accepted.If the computed result falls between the lower and upper bound values, the test is inconclusive.(-4.489713) has a negative impact on economic growth which shows that a percent increase in public expenditures on health infrastructures leads to a decrease in expected economic growth by 4.48 percent on average.The coefficients of public expenditure on educational infrastructures have positive impact on economic growth indicating that a percent increase in PEXPE will lead to an increase in economic growth to about 3.66 percent.Similarly, government spending on the transport and education sectors have positive impact on economic growth which means that a percent increase in the growth rate of government spending on each sector leads to an increase in growth of the economy to about 1.78 and 0.05 percent respectively.
On the other hand, the coefficients of government spending on constructions and economic services infrastructures have negative impact economic growth which means that a percent increase in the growth rate of government spending on each sector leads to a decrease in growth of the economy to about 1.27 and 1.07 percent respectively.The coefficient of error correction mechanism (ECM) is negative -2.058693 and significant at 0.05 per cent critical level as evident by the low probability value of 0.0041.This shows that about 2.05 per cent speed of adjustment is needed to correct the disequilibrium in Nigeria's previous GDP growth rate in the current year.The R-Squared suggests that about 99% systematic variations in Gross Domestic Product is explained by the four explanatory variables in the model, leaving about 1% unexplained, which can be explained by factors not included in the model.The Prob (F-statistic) measure the overall significance of the model.The Prob (F-statistic) value of 0.012728 which is less than 0.05 indicate that the model was statistically significance.

Conclusion
The study examined the impact of public expenditure on infrastructural development in Nigeria.The study found that public expenditure tools on infrastructures have positive and negative effects on economic development in Nigeria within the context of Autoregression and Distributive Lag Bound test and a dynamic short run Cointegration and long run form modeling framework, applying annual data from 1986 to 2022.Therefore, even though government expenditure in these selected sectors have been on the increase over the years, this is not adequate to satisfy the demand for these facilities thereby creating a gap in the infrastructural development process of the country.Similarly, the maintenance and repairs culture of damaged facilities, corruption, bureaucratic bottlenecks are some of the major challenges facing the infrastructural deficit in the country.

Recommendations
Based onthe findings in the study, recommendations were made. i.
First, for the fact that government expenditure drives infrastructure development, the federal government should fine-tune its fiscal responsibility by increasing the capital expenditure aspect of annual budgetary alloca ons.Such increased capital alloca ons should be directed at the provision of more roads, electricity, health and educa on facili es, water supply, irriga on and other infrastructural projects.ii.
Secondly, the effec veness of credit to the private sector calls for supports from the banking sector for infrastructure developmen n the country.By implica on, supports from the bank will to a large extent assist the government in the provision of infrastructure facili es for welfare and sustainable development.

Table 2 :
Unit Root Test Results (ADF Statistics)

Table 3 :
Bounds Test of Presence of Co-integration in ARDL including the Critical Lower and Upper Bound Values for the periods

Table 4
Table 4 above revealed the coefficient of PEXPH