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PUBLIC CAPITAL EXPENDITURE AND GROSS DOMESTIC PRODUCT (GDP) OF NIGERIA

Project Topic: The Relationship between Public Capital Expenditure and Gross Domestic Product (GDP) of Nigeria


ABSTRACT

This project aims at finding the relationship between public capital expenditure and GDP of Nigeria. In the process two objectives were examined. The first is the relationship between public capital expenditure estimates and GDP of Nigeria, while the second objective is the relationship between total public expenditure estimates and GDP of Nigeria. During the process of this project two hypotheses were being tested and analyzed. The data used were secondary data and being sourced from CBN statistical bulletin, the data were being presented in tables and bar charts. The study revealed as its findings that public capital expenditure has a significantly positive relationship with the GDP of Nigeria. Finally based on the computation carried during this research, it is evident that high efficiency and effectiveness of public spending can help in maximizing the potential of government outlays to improve the country’s GDP

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Bhatia (2008) defines public capital expenditure as the expense a government incurs in carrying out capital project. According to the Oxford Business Dictionary a public capital expenditure can be defined as any expenditure other than operating expenditure which extends over a period of time exceeding one year. While the Gross Domestic Product also known as “GDP” can be defined as the measure of all the services and goods produced in a country over a period of time making a year.

Historically, public capital expenditure has recorded continuous increase overtime in Nigeria. However government depend heavily on physical and capital intensive infrastructure to improve the economic welfare of the people and facilitate production of goods and services across all sectors of the economy so as to stimulate economic growth Deverajan et’al, (2000). However, in spite of the fact that public capital expenditure has increased rapidly during the last two decades and in site of its role in the Nigerian economy. Lowell Haris (2001) says, the economists have generally concentrated their attention on the theory of taxation. The theory of public capital expenditure has been more or less confined to those generalities in terms of its effect on the economy growth.

However, the relationship between public capital expenditure and GDP has continued to generate series of debate among scholars.

Government performs two basic functions protection and provision of public necessities such as Roads, Education, Health and Power to mention a few. Some scholars say that an increase in public capital expenditure on socio-economic and physical infrastructures, encourage economic growth. Similarly public capital expenditure on infrastructure such as roads, communication, power etc reduced production cost, increase private sector investment and profitability of firms.

Public capital expenditure can also prove helpful in accelerating the rate of economic development. In order to maintain a steady rate of growth in a developing economy like Nigeria. Public capita expenditure can be helpful in maintaining adequate amount of investment expenditure, so that there can be employment opportunities and increased economic growth, an increase in government spending can lead to a substantial increase in GDP through budgetary expansion.

Jain et al (2008) says in order to accelerate economic development in the developing economies public capital expenditure plays a crucial role, it facilitates social overhead, roads, electricity development of private industries and agriculture that has thus assisted in market expansion and rate of investment. In Nigeria public capital expenditure has continued to rise due to huge receipts, increased demand for public goods like roads, power education and health.

STATEMENT OF PROBLEM

This study purports to find the relationship that exists between public capital expenditure and GDP of Nigeria.

In Nigeria public capital expenditure has continued to rise due to huge receipts from production, increased demand for public goods like roads, communication, health and power, to know if the relationship between public capital expenditure has a positive or negative effect on economic growth. If there is proper allocation of public capital expenditure among various sectors of the economy. Unfortunately the persistent rise in public capital expenditure has not translated to meaningful growth and development in Nigeria.

OBJECTIVES OF THE STUDY

  • To examine the relationship between annual public capital expenditure and GDP of Nigeria in recent times.
  • To examine the relationship between total annual public expenditure estimates and GDP of Nigeria in recent times.

RESEARCH QUESTIONS

  • What is the relationship between annual public capital expenditure and GDP of Nigeria in recent times?
  • What is the relationship between the total annual public capital expenditure and GDP of Nigeria in recent times?

RESEARCH HYPOTHESIS

  • There is no significant positive relationship between the annual public capital expenditure and GDP of Nigeria in recent times.
  • There is no significant positive relationship between the total annual public capital expenditure and GDP of Nigeria in recent times.

SCOPE OF THE STUDY

This study was aimed at identifying the relationship between public capital expenditure and GDP of Nigeria. To carry out the study the public expenditure estimate and GDP of Nigeria were used. The study was restricted to the periods 2000-2009.

LIMITATIONS OF THE STUDY

There were some limitations to this research work which include.

  • Short time frame to complete the research work
  • There wasn’t enough finance

SIGNIFICANCE OF THE STUDY

It has become essential to evaluate the relationship between public capital expenditures and GDP of Nigeria. The effect it will have on the Nigerian economy in years to come.

To know if an increment or reduction in capital expenditure will improve the GDP of Nigeria.

The result of this research work will be on great benefit to scholars, researchers, students and be of great aid to the Federal Government of Nigeria.

1)            To make sure funds meant for this sectors are properly managed.

2)            Funding of anti corruption agencies to tackle high level of corruption

3)            To know if to increase its investment in development of transport.

—This article is incomplete———–This article is incomplete———— It was extracted from a well articulated quality Project, Research Work/Material

Project Topic: The Relationship between Public Capital Expenditure and Gross Domestic Product (GDP) of Nigeria

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———–THIS ARTICLE IS NOT COMPLETE————

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