SOCIAL SECTOR EXPENDITURES AND ECONOMIC WELLBEING IN NIGERIA: AN EMPIRICAL ANALYSIS

Abstract

Ensuring improved economic wellbeing is a vital requirement for a peaceful and stable society. However, leaving the responsibility of providing the needed ingredients for enhancing economic wellbeing to a self-interest driven institutional arrangement in a developing economy will most likely result in market failure. It is then necessary that the extra-market institution of Nigeria, given its resource capacity, intervene to provide critical social goods to enhance the economic wellbeing of its citizens. Thus, this paper empirically studied social sector expenditures’ effects on Nigerians’ economic wellbeing, over the sample period 1981 to 2022. Specifically, social sector expenditures are indicated by defence, health, education and transportation expenditures, while the Human Development Index is employed as a proxy for economic wellbeing. Data from the World Bank’s World Development Indicators and the statistical data bulletin of Nigeria’s Central Bank are utilised by applying the ‘Autoregressive Distributed Lag’ analytical procedure. Accordingly, the estimation established that the federal government’s social outlays in defence, health, and education positively and significantly influenced economic wellbeing (Human Development Index) over the short and the long runs, while transportation spendings positively and insignificantly impacted the regressand. Based on the research findings, it is concluded that social sector expenditures are indispensable and vital for improving the economic wellbeing of Nigerians. Following the empirical evidence, the researchers recommended that the federal government should, inter alia, allocate a significant portion of the defence expenditure to strategic planning and modernization efforts by investing in advanced technology, equipment, and training to ensure that the armed forces are adequately equipped to handle evolving threats.

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