Fiscal Policy and Non-Oil Output in Nigeria

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue I, January 2020 | ISSN 2454–6186

Fiscal Policy and Non-Oil Output in Nigeria

EKINE, Data Irene¹, WEST, Jim Ibiso^2
1,2Department of Agricultural and Applied Economics, Faculty of Agriculture, Rivers State University, Port Harcourt, Nigeria

Abstract: – The study examined fiscal policy and non-oil output in Nigeria from 1970-2017. Secondary data on government capital and recurrent expenditure for the study was collected from CBN statistical bulletin and the econometrics methods of ADF unit root test, Johansen co-integrated test and ECM technique were used for the analysis. The results of the output model showed that all the variables were stationarity at order one and have long run relationship. The parsimonious ECM result showed that a percentage increase government capital expenditure increases the non-oil sector output sector by about 29%.The coefficient of government recurrent expenditure showed that a percentage increase government recurrent expenditure will increase the non-oil sector output sector by about 2.0%. Given the scenario above, it was concluded that there is a direct relationship between government expenditure and non-oil output in Nigeria during the period of study. Based on these findings, it was recommended that the percentage of government capital budget should be more than recurrent as former play more vital role in the development of the non-oil output in Nigeria.

Key Words: Government Expenditure, Non-oil output, Capital budget, Recurrent

I. INTRODUCTION

The non-oil sector of the Nigerian economy embraces the groups of economic activities, without the petroleum and gas industry and those rightly connected to it. The sector largely includes subsectors such as manufacturing, agriculture, transport and communication, finance, tourism, real estate, construction as well as education and health. However, in terms of supporting the economy, the non-oil sector has continued to perform below its potentials. There is therefore, the urgent need to specifically use fiscal policy tools such as government expenditure to launch the non-oil sector on the pathway of sustained production and stable economic growth. Thus, government expenditure entails financial matters in which government income and consumption are utilized as a change of either to accomplish the desirable impact and maintain a strategic distance from the undesirable ones (Obayori, 2016).

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