THE IMPACT OF SOCIAL AND COMMUNITY EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA: A SECTORAL APPROACH

Authors: T. O. Ogundipe, M. S. Ajidani & A. Ibrahim

ABSTRACT

This study evaluated the effects of government spending on education and health on economic growth in Nigeria from 1981 to 2025, utilizing annual data. Johansen cointegration and a Vector Error Correction Model (VECM) were employed. The findings show notable long-term relationships among the variables. Government expenditure on social and community services contributed to increases in nominal GDP over time. While education spending positively influenced economic growth, health spending showed a negative long-term association with GDP, suggesting inefficiencies in health-sector allocation. In the short run, previous GDP growth was the primary determinant of current output, and education expenditure adjusted most rapidly to restore equilibrium following shocks. These results point to the necessity of efficient investment in education and urgent reforms in the health sector. It is recommended that policy efforts prioritize the quality and efficiency of health spending and increase investment in education to achieve sustainable economic growth.

Keywords: Social expenditure, education expenditure, health expenditure, economic growth, nominal GDP, VECM, Johansen cointegration, Nigeria

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