A Study on the Effect of GDP Growth on Public Expenditure Patterns in Nigeria
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Background of the Study
Public expenditure is a critical tool for economic development, and its allocation often reflects the priorities of a country’s growth strategy. In Nigeria, GDP growth is expected to have a direct impact on public expenditure patterns, influencing the allocation of resources to sectors such as education, healthcare, and infrastructure. The interplay between GDP growth and fiscal spending has garnered attention as policymakers strive to achieve a balance between stimulating economic growth and providing essential public services (Nwankwo, 2023). A robust GDP growth can generate higher government revenues, which in turn could lead to increased public spending. However, the efficiency and equity of this spending are subject to intense scrutiny.
Over recent years, Nigeria has witnessed fluctuations in GDP growth rates, which have affected the scale and composition of public expenditure. Critics argue that despite periods of economic expansion, the allocation of public funds does not always translate into improved service delivery or infrastructural development. This mismatch raises concerns about the effectiveness of fiscal policies in harnessing GDP growth to meet developmental goals (Ibrahim, 2024). Moreover, the influence of political factors and budgetary constraints often skews expenditure priorities, leading to inefficiencies and inequities in public spending.
The current study aims to examine the effect of GDP growth on public expenditure patterns by analyzing recent fiscal data and evaluating how changes in economic performance influence budgetary decisions. It will investigate whether increases in GDP lead to proportional increases in public spending on critical sectors, or if other factors dilute this relationship. The research also considers the role of governance, transparency, and accountability in shaping public expenditure outcomes. By integrating quantitative analyses with qualitative assessments, the study seeks to provide a comprehensive understanding of how GDP growth is translated into public spending and to identify strategies that can optimize fiscal outcomes (Chukwu, 2023).
Statement of the Problem
Nigeria’s economic growth, as measured by GDP, has not consistently led to improved public expenditure patterns that benefit the broader population. Although higher GDP levels are expected to yield increased government revenues and, consequently, enhanced public spending, discrepancies exist between revenue generation and effective fiscal allocation. In many instances, rapid GDP growth has not been matched by corresponding improvements in public service delivery, indicating potential inefficiencies in budget management and resource allocation (Nwankwo, 2023).
The problem is compounded by political and administrative challenges that often result in misaligned fiscal priorities. Resources may be disproportionately allocated to areas that do not necessarily contribute to long-term development, leaving critical sectors underfunded. Moreover, external factors such as global economic shocks and domestic revenue fluctuations further complicate the relationship between GDP growth and public expenditure. These issues have led to concerns about the adequacy of fiscal policies in translating economic gains into tangible developmental outcomes (Ibrahim, 2024).
This study seeks to investigate the channels through which GDP growth impacts public expenditure patterns and to identify the barriers that hinder effective fiscal allocation. By analyzing fiscal data from recent years and examining case studies of budgetary practices, the research aims to offer insights into how public expenditure can be better aligned with economic growth to promote sustainable development. The goal is to provide policymakers with recommendations for optimizing fiscal policy so that increases in GDP yield meaningful improvements in public services and infrastructure (Adebayo, 2025).
Objectives of the Study
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To analyze the relationship between GDP growth and public expenditure patterns in Nigeria.
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To identify the factors that hinder effective translation of GDP gains into public spending.
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To propose policy measures to optimize fiscal allocation and service delivery.
Research Questions
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How does GDP growth affect the allocation of public expenditure in Nigeria?
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What are the main barriers to effective fiscal spending despite GDP growth?
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How can fiscal policies be reformed to better align public expenditure with economic performance?
Research Hypotheses
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Higher GDP growth is associated with increased public expenditure on social sectors.
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Political and administrative inefficiencies significantly moderate the relationship between GDP growth and fiscal allocation.
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Reforms in fiscal policy can enhance the effectiveness of public expenditure in delivering developmental outcomes.
Scope and Limitations of the Study
The study examines public expenditure patterns in Nigeria from 2020 to 2024. Limitations include the variability of budgetary data and the influence of exogenous economic shocks.
Definitions of Terms
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Public Expenditure: Government spending on goods, services, and development projects.
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Fiscal Policy: Government strategies for managing revenue and expenditure.
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Budgetary Allocation: The distribution of public funds across various sectors.
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