Public Sector Investment and Poverty Reduction in Nigeria: Evidence From 1981- 2022

Abstract

Public sector investment in any economy is often shown in the level of government spending, which is revealed in the welfare level of her populace as part of her fiscal obligation. This study examines the effect of government expenditure and poverty reduction in Nigeria using secondary data sourced from the publication of the Central Bank of Nigeria Statistical Bulletin and World Development Indicators from 1981 to 2022. The study employed the Auto-regressive Distributive Lag Model (ARDL) to achieve its objectives. The results of the findings revealed that government spending in building and construction, health have a positive and significant effect on per capita income used as a proxy for welfare of Nigeria’s populace. While government investment in education has a negative and insignificant effect on per capita income in Nigeria. Moreover, interest rate and inflation rate as contributory variables have a positive effect on per capita income in Nigeria. The study therefore recommends that government should prioritize investment in infrastructure projects such as roads, bridges, energy facilities, and public transportation systems. This will not only stimulate economic growth but also create employment opportunities and improve connectivity across regions. Also, prioritize targeted investments in quality education through teachers training, curriculum development, and infrastructure to enhance the learning environment and ensure that students acquire the necessary skills for economic productivity.