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THE IMPACT
OF GOVERNMENT EXPENDITURE ON STANDARD OF LIVING IN NIGERIA (1982-2012)
INTRODUCTION
Over the
years, government expenditure also known as government spending has been
identified as a major tool in improving the standard of living of citizens in a
country. Various spending on recurrent and capital projects such as such as
building of schools, provision of good and affordable health care, payment of
salaries/casual wages, provision of good roads, electricity and clean water are
determinants of standard of living (Morris, 1987). Increased spending on these
infrastructures has the tendency of improving standard of living in a nation.
For instance, policy interventions to reduce mortality may require increased
public spending or, similarly, it may be necessary to spend more on educational
programs that aim to increase primary completion rates. However, what matters
is not only how much was spent but also how effectively this money was spent,
there are a handful of countries that suggest an inconsistent relationship
between changes in public spending and outcomes. For example, Thailand has
increased public spending on primary schooling more than Peru did, yet primary
school completion fell in Thailand and increased in Peru. Likewise, an analysis
of Malaysia over the late l980s found little association between public
spending on doctors and infant mortality, and the increased construction of
public schools in Indonesia that occurred in the 1970s did not have a
significant positive impact on school enrollments. The cross-country
association between public spending and outcomes, after controlling for
national income, is found to be statistically and substantively weak. The
message is not that public funding cannot be successful; rather, it is
commitment and appropriate policies, backed by effective public spending that
can achieve these goals.
Public
expenditure is not always effective in providing quality services and reaching
the intended beneficiaries, who are often the poor, and this partly explains
why spending has a weak relationship with outcomes. Another reason for such a
weak relationship is the interaction between the private and public sectors
Increasing
public provision may simply crowd out, in part or in whole, equally effective
services offered by non-government providers. Unless resources supporting
services that work for poor people, the public resources spent on these
services will not get the optimal outcome. If more public money is spent on
services and more of that money is spent on services utilized by the poor, the
spending pattern will determine the efficacy of spending. For instance, wages
and salaries of teacher on average account for 75% of recurrent public
expenditure on education. There is no doubt that teachers’ play a critical
role in the schooling process and given; them adequate incentives is important;
however, spending on other vital input(such as textbooks) is also important.
Too much spending on one input will have a negative impact on the quality of
learning. To address this, governments must tackle not only the technical or
managerial questions of how much to spend on one input relative to another, but
also the institutional and political contexts that generate these decisions (
Son, 2009).
PROBLEM
STATEMENT
Most poor
Nigerians do not get their fair share of government spending an public services
such as in health and education. Benefit incidence analysis on public expenditure
provides a clearer picture of who benefits from government spending. Evidence
largely suggests that the poorest fifth of the population receives less than a
fifth of education and health expenditures, while the richest fifth gets more:
46% of education spending, and the poorest receive only 11% (Filmer 2003),
Similarly, in other developing countries such as India the richest Eight
receives three times the curative health care subsidy of the poorest Eight. One
reason for this imbalance is that spending is biased toward services mainly
utilized by richer people; another reason is that while channeling public
spending toward services utilized by the poor helps, such services may not be
reaching the targeted beneficiaries.
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