Econometric Analysis of the Effectiveness of Public Revenue in Economic Growth in Developing Countries: An Examination of Nigerian Economy

Charles Ayodele Jegede

Abstract


This paper focused on the econometric analysis of the effectiveness of public revenue in economic growth in developing countries: an examination of Nigeria between 1980–2008. The study set one hypothesis which includes public revenues does not impact on economic growth in Nigeria. The study utilized secondary data obtained from the central bank of Nigeria and Federal Ministry of Finance. The study specified a workable model in which Real Gross Domestic product is the dependent variable while aggregate oil revenue, non oil revenue and federal independent revenue were independent variables. Ordinary least square (OLS) method, T-test, and F-test were used as analytical techniques. The study revealed that public revenues were effective in promoting economic growth in Nigeria because the coefficient of determination (R2 = 0.63 or 63%) was significant. The finding shows that oil revenues dominate public revenues in Nigeria and has caused volatility in other revenues such as non-oil and federal government independent revenue. The study therefore recommended that the federal government should revise its macroeconomic policies to improve efficiency and productivity of recourses allocation in the economy. Also, government should reexamine its non oil revenue by way of increasing tax rate and introducing new taxes in such a way that it does not distort the working of the economy.

Full Text: PDF DOI: 10.5539/ijef.v6n8p187

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International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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