Impact of Transport and Communication Expenditure on Economic Growth in Nigeria, 1981-2022

Abstract

Many studies have examined the impact of transport and communication spending on economic growth in Nigeria, but it is difficult to say for sure if the relationship is beneficial for economic growth. This study is crucial because prior empirical findings conclusions have not been universally accepted. This research aims to analyze the impact of transport and communication expenditures on Nigeria's economic growth from 1981 to 2022. The study employs the Autoregressive Distributed Lag (ARDL) model as the analytical method, utilizing secondary data obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and the National Bureau of Statistics (NBS). The study discovered a long-term relationship between public expenditure on transport and communication and Nigeria's economic growth. The findings showed that public capital spending on transport and communication (TRANS-COMMC) had a positive and significant effect in both the long and short run, with coefficients of 0.02 and 0.01, respectively. However, public recurrent expenditure on transport and communication (TRANS-COMMRE) and inflation (INF) were found to have a negative but significant impact in the long run, with coefficients of -0.19 and -0.007. The study concluded that public expenditure on transport and communication contributed to economic growth in Nigeria, consistent with Keynesian theory. It recommended that the government should allocate more funds to the transport and communication sectors. Also, high degree of transparency and accountability on public expenditure becomes a prerequisite in the sector in order to avert mismanagement or misappropriation of resources. Government should also strive to reduce inflation to a single digit.