ANALYSIS OF EFFECT OF GOVERNMENT REVENUE ALLOCATION ON REAL ECONOMIC GROWTH IN NIGERIA
Gwom, Ayuba Usman and Gozuk Austine Emmanuel
Volume 9 Issue 2
Abstract
The study examined the effect of Government revenue allocation on real economic growth in Nigeria spanning from 2001 to 2020. The study was guided by expost-facto design approach, and the time series data was sourced from the Central Bank of Nigeria (CBN) Bulletin and World Development Indicators (WDI). The ADF unit root test revealed that the variables were integrated at 1(1). The Error Correction Model was employed as estimation technique. The findings revealed that federal government share of revenue had a mean value of 2322.655; revenue allocated to state government had a mean of 1426.449, while revenue allocated to local government was 1088.073. The study found a unidirectional causality running from CPI to RAF, RAL and Ras respectively. Bi-directional causality exists between RAL and RAF and RAS and RAF respectively. The findings revealed that revenue allocated to the federal Government had a significant negative effect on real Gross Domestic Product (rGDP), and revenue allocation to Local and State governments had insignificant positive effect on real GDP. The findings established that corruption had an insignificant negative effect on real economic growth. The study concluded the effect of revenue allocation to the federal government on real GDP was negative and significant, while revenue allocated to State and local governments had positive but insignificant effect on real GDP. The study recommended among others that government should allocated more revenue to local Governments, State governments should diversify their internally generated revenue sources and government should intensify its efforts in fighting corruption in the economy. Keywords: Government Revenue, Revenue Allocation, Economic Growth, Real Economic Group
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