Government Capital Expenditure: Implicationfor Economic Growth Prospect in Nigeria

Abstract

The purpose of this study was to clarify the impact of government capital expenditure on
economic growth. It used GDP growth as a substitute for economic growth. The capital
expenditure was not considered aggregated but was decomposed (that is, the components of the
capital expenditure are taken into account). Capital expenditure components include capital
expenditure in businesses and services, capital expenditure in social welfare, capital expenditure
on economic services and capital expenditure on social and community services. The study used
FDI as a control variable. In this study, we used the vector autoregressive (VAR) model. The results
of the regression show FDI does not have an impact on economic growth while capital expenditure
on economic services, social and community services, administration and total capital
expenditure has an impact on economic growth. The paper recommends that government should
put in place policy measures that will guarantee an increase in the level of capital expenditure
every year