Poverty Menace and Social Economic Nexus in Nigeria: A Bound Test Approach

Abstract

Nigeria has recorded variations in major macroeconomic variables since independence. Growth episodes over the years though encouraging put has not translated to improvement in poverty incidence. The rate of poverty in the nation has out-grown population growth, hence, this study seeks to relate various sectors of the economy to the perturbing poverty level in the nation with emphasis on the social sectors in which health and education play integral roles. This study examines poverty and social economic mix in Nigeria with the objectives of ascertaining the partial impacts of productivity (as a measure of health outcome), public social expenditures, agricultural output, manufacturing output and infrastructural development on poverty incidence, the study collected secondary annual time series data spanning 37 years from 1981 to 2017 on poverty index (PVTI), productivity due to good health (HP) and other explanatory variables as earlier identified. The pre-estimation techniques adopted include descriptive statistics, Phillips-Perron stationarity test and bounds test to co-integration. The preliminary result reveals that the variables in the model have long run relationship. The parameters of the model were estimated using the ARDL technique and the study found that productivity due to good health (HP) has significant effect on poverty reduction, as public social expenditures, current period’s agricultural output and previous period manufacturing output have similar effects but not statistically significant, however, infrastructural development and current manufacturing output have significant positive impact on poverty incidence in the country. On the basis of our empirical revelation, the study recommends that government should adopt multi-sectoral and big push development approaches with priority on employees’ productivity through free health care programmes for the unemployed, quality health insurance scheme for the employed, free education for children of the poor and unemployed, and that investment in critical infrastructures such as roads, rail, energy and storage facilities that promote agriculture and manufacturing outputs be improved upon if poverty is to be decisively tackled in Nigeria.