CHAPTER ONE
INTRODUCTION
1. 1 BACKGROUND OF THE STUDY
Government expenditure no doubt is an important instrument for a government to control the economy of a nation. Economists have been well aware of the effects in promoting economic growth. Anyway, the general view is that government expenditure notably on social and economic infrastructure can be growth enhancing although the financing of such expenditure to provide essential infrastructural facilities including transport, electricity, telecommunication, water and sanitation, waste disposal, education and health can be growth retarding (Olukeyode, 2009). Nowadays, the relation between government expenditure and economic growth has continues to generate sense or controversies among scholars in economic literature (Inuwa, 2012).
According to him, the nature of the impact of government expenditure on economic growth is in conclusion, and from the view point of the student researcher is still not incontrovertible. As a matter of fact, while some author or researcher believed that the impact of government expenditure on growth is negative or non-significant (Tuban, 2010). Others believed that the impact is positive and significant (Alexiou, 2009). The structure of Nigeria government expenditure can boldly be categorized into capital and recurrent expenditure (Muritata 2011). The recurrent expenditure is basically government expenses on administration such wages salaries, interest on loans, maintenance cost, etc. However, the expenses on capital project like roads, airports, education, telecommunication, electricity generation etc. are generally referred as capital expenditure (Maritata 2011). Ironically, the effect of government spending in Nigeria growth is still a puzzle and an unresolved issue indeed theoretically, it is an unresolved issue. Although the theoretical positions on the subject are quite diverse, the conventional wisdom is their or spending is a source of economic instability or stagnation. The research does not conclusive support the conventional wisdom a few studies report position and significant negative relationship between government spending and economic growth while others find significantly negative or no relation between an increase in growth in real output.