Public Capital Accumulation and Economic Development in Nigeria; 1970-2010

This study empirically examine the relationship between Public Capital Accumulation and Economic Development in Nigeria from 1970-2010. Public capital accumulation was disaggregated into Federal Government capital expenditure on Administration, Economic sector, Social and Community services and Transfers. The stationarity and non stationarity of the data series were examined using group unit root test. The variables PCGDP, ECONS, ADM, SOC, and TRANSF attained stationarity after first differences. The Johansen cointegration test of trace and maximum Eigen value statistics was used to establish long run equilibrium relationship among the variables in the model. We also estimated the overparameterized and parsimonious ECM to account for short run dynamic adjustment required for stable long run equilibrium relationship among the variables in the model. The impact of ECON, ADM and SOC on economic development was positive and statistically insignificant while TRANSF was negative and statistically significant. The positive but insignificant impact of ADM, SOC, ECON is worrisome because these are the sectors that account for a huge amount of government capital expenditure. Transparency and accountability in the conduct of Government activities should be encouraged. Thus the entrenchment of the culture of transparency and accountability will help to conserve public resources for the many things the Government has to do for the society. Government should cut its spending particularly on projects and programs that generates least benefits or impose highest cost. The study showed that disaggregation of public capital accumulation truly revealed the impact of each component on economic development than aggregation.