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SIZE AND GROWTH OF PUBLIC INVESTMENT IN NIGERIA: IMPLICATIONS FOR REAL SECTOR DEVELOPMENT
ABSTRACT: This paper offers empirical evidence linking public investment to real sector development in Nigeria during 1981-2017. It specifically employed autoregressive distributed lag (ARDL) model to analyze the impacts of public investment in economic, social and community services and gross public investment as a ratio of GDP on agricultural and manufacturing value added. . The short run result showed that public investment in economic, social and community services impact positively on agricultural value added in the short run. The positive impact of investment in social and community services economic services was greater than that of economic services by a margin of 0.027 percent. This suggests that investment in human capital formation such as education and healthcare delivery seems to provide greater opportunity for agricultural development. Additionally, public investment in economic services also exerts significant positive impact on manufacturing value added. The result further showed that gross capital expenditure as a ratio of GDP impact positively on agricultural and manufacturing value added in the short run. It was evidence from the result that its impact on agricultural value added was stronger in the long run. Accordingly, it is recommended that policy makers should step up investment in social and community services in order to improve human capital required for real sector development in Nigeria.
KEYWORDS: Public Investment, Real Sector, Agricultural Value Added, Manufacturing Value Added, GDP