CAN FISCAL DEFICIT PROMOTE INCLUSIVE AND SUSTAINABLE GROWTH IN NIGERIA: EVIDENCE FROM THE DATA
ANGBAS Jonathan Avreson, MIBA’AM, Benjamin W. & DAMAK, Obadiah Ibrahim
Department of Economics
Plateau State University, Bokkos
Email: avrenab@yahoo.com
Corresponding author: ANGBAS Jonathan Avreson
ABSTRACT Using a co integration analysis and a Pairwise granger causality test, this study finds that there has been no long run equilibrium relationship between government deficit spending and the rate of economic growth in Nigeria. The study also finds that growth has been fueled largely by rent seeking activities and this has heightened the rate of unemployment in Nigeria resulting into large scale incidence of poverty on the one hand and growing income inequality on the other. This is the result of the non-inclusive and unsustainable nature of the country’s growth where a large proportion of the population has no access to the means of production. The result is further corroborated by the weak link in the log linear equation results as well as a unidirectional causality between fiscal deficits and growth, unemployment on the one hand and poverty on the other. The Nigerian economic growth profile has been reported to be on the upward swing in the last decade, however, the incidence of poverty, unemployment, income inequality have worsened while the rate of labour force participation in productivity have declined. The obvious conclusion that can be drawn from this is that such growth has not been inclusive and sustainable. Theoretically, Keynes had argued that economies experiencing sluggish economic growth should adopt expansionary fiscal policies that can increase the level of aggregate demand and stimulate aggregate consumption and investments leading to increased productivity. For the country to overcome the challenge of non-inclusive growth and ensure its sustainability, fiscal policy as encapsulated in deficit spending and borrowing must deliberately target the very poor and vulnerable members of society
