Institute for the Advancement of Developing Economies


Date of this Version


Document Type



Journal for the Advancement of Developing Economies 2018 Volume 7 Issue 1, pp 59-77

doi 10.32873/unl.dc.jade7.1.5


This study empirically investigated educational expenditure and economic growth nexus in Nigeria using secondary and times series data from 1987 to 2016, sourced from the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS) and other agencies and sources. Relevant statistical tools were employed in exploring the relationships between these variables. The random characteristics of the variables were tested using the Augmented Dickey Fuller (ADF) technique. The links among educational expenditure, education sectoral output and economic growth were tested via the Autoregressive Distributed Lag (ARDL) and bound test approach developed by Pesaran and Shin. Four research hypotheses were tested. The literature reviewed guided the interpretation of the results. The population for the study was Nigeria. The findings show that educational expenditure was inconsistent with education sectoral output. On the other hand, while recurrent educational expenditure exhibited significant relationship with real gross domestic product (economic growth), in contrast, capital expenditure on education was insignificant. Generally, the study concluded that the impact of educational expenditure on real GDP is mainly a function of the expenditure type in Nigeria. This is premised on the fact that only recurrent educational expenditure had both positive and significant long-run impact on economic growth within the period of study. The study attributed these findings to the fact that educational expenditure within the period of study was distorted by extraneous factors such as policy mismatch, inadequate funding, less priority placed on capital expenditure, fund misappropriation, etc. The study recommends that in line with international standards, the educational system of Nigeria requires an institutional transformation in terms of policy formulation, implementation and monitoring as well as funding. Also, priority must be given to capital expenditures to translate to economic growth.