Effect of Government Education Expenditure on Inclusive Growth in Nigeria: The Role of Institutions

Abstract

In Nigeria, achieving inclusive growth has been challenging due to insufficient public investment in human capital and weak institutional quality. These deficiencies have resulted in widespread poverty, income inequality, low GDP per capita, stagnant human development indices, and poor living standards. This study evaluated the effects of government expenditure on education on inclusive growth in Nigeria, while also examining the moderating role of institutional quality from 1990 to 2023. The study employed the ex-post factor quantitative research design. The Augmented Dickey-Fuller, and Phillip Peron unit root test statistics were used to determine the order of integration. The unit root test result showed that the variables were not integrated in the same order. Autoregressive Distributive Lag Model (ARDL) was employed and it was found that government expenditure on education had negative insignificant effect on the short run and negative significant effect on the long. In terms of the interaction with institutional quality, it was found that government expenditure on education also had both short and long run negative effect on inclusive growth in Nigeria. Furthermore, both inflation rate and unemployment rate had negative effect on inclusive growth both in the short and long run. The study therefore recommended that effort should be made in strengthening institutional frameworks to ensure that government investment in education contributes positively to GDP per person employed.