Fiscal policy and inclusive growth in Nigeria
Department of Economics, University of Uyo, Uyo, Nigeria.
Review Article
World Journal of Advanced Research and Reviews, 2024, 22(03), 1715–1732
Article DOI: 10.30574/wjarr.2024.22.3.1849
Publication history:
Received on 12 May 2024; revised on 24 June 2024; accepted on 27 June 2024
Abstract:
This study investigated the effect of fiscal policy on inclusive growth in Nigeria from 1985-2022. Secondary data on the human development index, the ratio of total tax revenue to GDP, total government expenditure, inequality, and government expenditure on infrastructure and education were sourced from the Central Bank of Nigeria (CBN) and the United Nations Development Programme (UNDP). The Autoregressive Distributed Lag (ARDL) technique was employed as the main analytical tool. The ARDL Bounds test showed that in the long run, government expenditure on infrastructure, and education, has a positive and insignificant relationship with inclusive growth (human development index) in Nigeria. Also, total government expenditure and the ratio of total tax revenue to GDP have a negative and insignificant relationship with inclusive growth (human development index) in Nigeria. Interestingly, inequality has a negative and significant relationship with inclusive growth (human development index) in Nigeria. In the short run, the ratio of total tax revenue to GDP and government expenditure on infrastructure has a negative and significant relationship with inclusive growth (human development index) in Nigeria. At the same time, government expenditure on education, total government expenditure, and inequality has a positive and significant relationship with inclusive growth (human development index) in Nigeria. These results highlight the vital role that responsible fiscal policy management plays in promoting sustainable development and inclusive growth. The study recommended a need to augment tax revenue, enhance capital investment, and address income inequality to bolster inclusive growth efforts in the country further.
Keywords:
Fiscal Policy; Inclusive Growth; Autoregressive Distributed Lag (ARDL); ARDL Bound Test; Human Development Index
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