The Effect of Road and Construction Recurrent Expenditure on Economic Growth in Nigeria

Abstract

This paper looked at how government recurrent spending on roads and construction affects economic growth in Nigeria from 1981 to 2023. To do this, the study gathered data on real gross domestic product, government recurrent spending on roads and construction, interest rate, and inflation rate from reports by Nigeria’s central bank. The main method used was the Autoregressive Distributed Lag (ARDL) technique. The results from the ARDL Bounds test showed that there is a long-term connection between the variables studied. In the long run, recurrent spending on roads and construction by the government was found to have a positive and significant effect on economic growth. On the other hand, both interest rates and inflation rates had negative effects on economic growth. In the short run, government recurrent spending on roads and construction had a negative and significant effect on economic growth, while interest rate had a positive and significant effect. Inflation rate had a positive but not significant effect on economic growth. The study concluded that recurrent spending on roads and construction has the potential to greatly boost economic growth in the future. Therefore, the government should make sure there is enough money for recurrent projects on roads and construction and the laws about fiscal responsibility should be followed quickly to improve how funds are managed and used for roads and construction so that routine maintenance, rehabilitation, and repairs of roads and construction will help preserve road quality and ensure uninterrupted mobility which in turn will reduce travel time, enhance reliability, and lower logistics delays, facilitate efficient movement of people and goods, and promote higher economic output in Nigeria.