Fiscal Policy and Human Development in Nigeria (1986-2017)

International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue V, May 2022 | ISSN 2454–6186

Fiscal Policy and Human Development in Nigeria (1986-2017)

Okere P.A. Ph.D¹, Uzowuru L.N Ph.D² & Mbaeri C.C. Ph.D^3
1&³Department of Banking and Finance, Imo State Polytechnic, Umuagwo-Ohaji
²Department of Banking and Finance, Federal Polytechnic, Nekede Imo State

Abstract: This study examined the effect of fiscal policy on human development in Nigeria using time series annual data from 1986-2017. The study used secondary data sourced from the Central Bank Nigeria annual statistical bulletin, World Development Indicator and Federal Inland Revenue Service publications. Fiscal policy instruments were proxied by government recurrent expenditure (GRE), government capital expenditure (GCE) and tax revenue (TRV) while human development was proxied by Human Development Index (HDI). The data were analyzed using Autoregressive Distributed Lag (ARDL) which revealed that all the series were stationary and adequately cointegrated. The study revealed a positive and significant relationship between fiscal policy and Human development in Nigeria. The study also found that recurrent expenditure exerts positive relationship while the capital expenditure exerts positive but insignificant relationship. The tax revenue reveals negative though insignificant relationship also. The study recommends that government should restructure its revenue base to finance fiscal policy expansion rather than embarking on external borrowing. This can be achieved by improving its revenue sources and efficient pursuit of tax reforms which will help to minimize tax avoidance, diversion and invasion. Again, government fiscal policies should place greater emphasis on the principles of effective taxation aimed at promoting investment and the growth of the human development.
Keywords: Budget, Fiscal Policy, Human development, Human Development Index, Taxation.
I.INTRODUCTION
Nigerian governments at different times had adopted either fiscal or monetary policies or a combination of both to manage the economy in order to achieve desired macroeconomic objectives such as promoting employment generation, ensuring economic stability, maintaining price stability and balance of payment viability, ensuring exchange rate stability and maintaining stable economic growth and development. The policy thrust used in manipulating the economy depends on the objectives that need to be achieved at any given time period. Government’s intervention in the economy through fiscal policy has been to manipulate the receipt and expenditure sides of its budget in order to achieve certain national objectives (Osuala and Ebieri, 2016). However, the objective of fiscal policy is to promote economic conditions conducive for business growth while ensuring that any such government actions are consistent with economic stability and growth.

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