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Rivers State University, Port Harcourt.
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| Title: | Government Expenditure and Poverty Reduction in Nigeria |
| Author(s): | E. NYECHE, EWUBARE DENNIS & EMEKA-ALERUCHI Victor Chim-Menem |
| Abstract: | This study examines the impact of government expenditure on poverty reduction in Nigeria from 1981 to 2022. Government expenditure was assessed through spending on education, health, and road construction. Conversely, the poverty level was gauged using the poverty headcount in Nigeria. Therefore, the specific objectives of this study are to determine the effects of government expenditure on education, health, and road construction on the poverty headcount in Nigeria. The data on expenditure for education, health, and road construction were sourced from the CBN Statistical Bulletin, while the datasets on poverty headcount were obtained from the National Bureau of Statistics (NBS). The data analysis included descriptive statistics, pre-estimation tests of unit root and cointegration, and model estimation of the parsimonious error correction model (ECM), among others. The unit root test results indicate that all variables are stationary at the first difference. The cointegration test results demonstrate that a long-term relationship exists between the poverty headcount and government expenditure. The parsimonious ECM indicates that expenditure on education negatively affects the poverty headcount, suggesting that increased spending on education significantly reduced poverty during the study period. Additionally, the results show that expenditure on health has a positive and significant effect on the poverty headcount, suggesting that healthcare expenditure has worsened the incidence of poverty. There is also evidence of a positive and significant effect of expenditure on road construction on the poverty headcount, indicating that road construction has not contributed to poverty reduction. The error correction coefficient (-0.2854) is negative and significant at the 5% level, indicating that approximately 28.54% of the deviation from long-run equilibrium can be corrected each year. Based on these findings, the study recommends, among other things, that the government should increase funding for education in line with UNESCO recommendations to create more opportunities for poverty reduction in Nigeria. |
| Keywords: | Poverty headcount, government expenditure, Poverty reduction |
| Journal: | Economic and Social Science Review (ESR) |
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