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IMPLICATIONS OF GOVERNMENT CAPITAL EXPENDITURE ON THE MANUFACTURING SECTOR OUTPUT IN NIGERIA
Abstract
Theoretically, both Keynesian and neoclassical economists provided tools for government’s intervention, particularly with regard to government capital expenditure. The aim of this paper was to investigate the effect of government capital expenditure on the manufacturing sector output in Nigeria. The study used quantitative time series data and multiple regression techniques in the analysis. The result of the co-integration test indicates long run relationship between dependent and independent variables. It also reveals that capital expenditure on road infrastructure (CEXR) and telecommunication (CEXT) affects the manufacturing sector output in Nigeria significantly while government capital expenditure on power has insignificant effect on manufacturing sector in Nigeria. The implication of this is that manufacturing sector output is clearly affected by factors both exogenous and endogenous to the government capital expenditure in Nigeria. Researchers therefore recommend that, there is need for government to reduce its budgetary allocation to recurrent expenditure on power sector and place more emphasis on the capital expenditures so as accelerate economic growth in Nigeria through manufacturing sector output and that government should also increase spending on road infrastructure, particularly on capital budgeting. As the results showed, road infrastructure capital expenditure has the greatest impact on the long-run with manufacturing sector output in Nigeria.
Keywords: Manufacturing Sector