Impact of Government Fiscal Expansion on Manufacturing Output in Nigeria

Impact of Government Fiscal Expansion on Manufacturing Output in Nigeria

¹Bamidele Vincent Olawale; ²Victor Ushahemba Ijirshar; ³Ashifa Tersugh & ⁴Onumoh Ahmed Yahaya

^{1, 4}Department of Accounting, School of Business Education

Federal College of Education (Technical) Gusau, Zamfara State, Nigeria

^{2, 3}Department of Economics, Benue State University, Makurdi, Nigeria

Corresponding Author: Victor Ushahemba Ijirshar

ABSTRACT

The study investigated the impact of government fiscal expansion on manufacturing output in Nigeria from 1970 to 2014. Secondary data were used for the analysis through Auto-Regressive Distributed Lag (ARDL) Approach. The study was anchored on two theories; Keynesian and the Solow’s augmented model. The result of the stationarity test shows that some variables captured in the model were stationary at level I(0) and other variables integrated of order 1(1). This is the justification for the application of the Auto-Regressive Distributed Lag (ARDL) model. The study found a positive but insignificant impact of government expenditure on manufacturing output in Nigeria. The study therefore recommended that the Nigerian government should manage and monitor effectively her expenditure, allow the importation of machineries or technology with reduced tariffs/duties and enhance restriction on finished goods that are produced locally, create an enabling business environment for both foreign and domestic investors in the country and encourage research and innovations in the sub-sector.

Keywords: Government Expenditure, Government Fiscal Expansion, Manufacturing Output and Technology

JEL Classification: H50, L60, N67, O30