Abstract

The study empirically investigates the relationship between all public expenditures and industrial growth in Nigeria between the periods of 1970–2012. The dependent variables used is index of industrial productivity which serves as a proxy for industrial growth while the explanatory variables are government expenditure on Administration, economic services, social and community services, and transfers. The findings of the co-integration result reveal a long run relationship between industrial growth and government expenditure components. However, the estimated results reveal that government expenditure on administration, economic services, and transfers maintain a negative long run relationship with industrial growth in Nigeria while government expenditure on social and community services maintain a positive long run relationship. The Granger causality test shows that there exist no directional causality between government expenditure components and industrial growth in Nigeria in two lag periods. The study therefore serves as a pointer to the policy makers that there is need to accelerate industrial growth by changing the productive content of public expenditure in Nigeria.

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