Article section

Article title
Contributor
Abstract
About article
DOI
Citation style
Copyright
Open access
References
Research Article

Impact of Capital Expenditure on Real Sector Performance in Nigeria

Authors

Abstract

This study examines the impact of fiscal and monetary policy tools on Nigeria’s real sector, particularly focusing on government capital expenditure. Employing time-series data from 1981 to 2023 to estimate the using the ARDL model and the bound test for cointegration, the findings reveal a significant positive correlation between capital expenditure and real sector output, affirming Keynesian theory over monetarist perspectives. While the Monetary Policy Rate (MPR) initially stimulates manufacturing output, its long-term impact is negative, indicating its short-term effectiveness. The results suggest that a structured expansionary fiscal policy is essential to drive productivity across key economic sectors, ultimately fostering economic stability. Recommendations include increasing budget allocation for the real sector, regulating interest rates, and ensuring strict monitoring of allocated funds.

Keywords:

Fiscal Policy Government Expenditure Monetary Policy Nigeria Real Sector

Article information

Journal

Journal of Sustainable Research and Development

Volume (Issue)

1(1), (2025)

Pages

10-24

Published

24-05-2025

How to Cite

Afolabi, L. O., & Yusuf, J. A. (2025). Impact of Capital Expenditure on Real Sector Performance in Nigeria. Journal of Sustainable Research and Development, 1(1), 10-24. https://doi.org/10.69739/jsrd.v1i1.280

References

Abayomi, A. (2017). The impact of oil price fluctuations on Nigeria's economy. Lagos University Press.

Akinwale, Y., & Ayodeji, F. (2021). Impact of public capital expenditure on the industrial sector in Nigeria: Evidence from a structural model approach. Journal of Economics and Sustainable Development, 12(5), 89–97.

Anyanwu, J. C. (2010). The role of the real sector in Nigeria's economic development. National Bureau of Statistics.

Bello, M. Z., & Yusuf, R. O. (2022). Capital expenditure and its influence on real sector performance in Nigeria: An econometric assessment. African Journal of Economic Policy, 29(2), 44–59. https://doi.org/10.4314/ajep.v29i2.3.

Central Bank of Nigeria. (2016). Statistical bulletin: Economic indicators and trends. Central Bank of Nigeria. Retrieved from https://www.cbn.gov.ng

Ekpo, A. H. (2015). Comparative economic analysis: Lessons from Singapore and Malaysia for Nigeria. African Economic Research Consortium.

Enaruna, D. V., & Okene, A. J. (2019). The Impact of the Capital Market on Investment in the Real Sector of the Nigerian Economy. International Journal of Research and Innovation in Social Science, 3(11), 83-89.

Essai, A., & Ibor, A. (2016). Reviving the real sector: Policies and challenges in Nigeria. Nigerian Institute of Social and Economic Research.

Eze, C., & Nwachukwu, J. C. (2020). The role of capital investment in the growth of Nigeria’s real sector: A disaggregated analysis. International Journal of Finance and Economics, 25(4), 559-570. https://doi.org/10.1002/ijfe.2118.

Mamuruemu, D., Okereke, S., & Imuseh, M. (2020). Effect of Federal Government Capital Expenditure on the Nigerian Economic Growth. International Journal of Academic Research in Business and Social Sciences, 10(5), 258-274.

Nwite, S. C., & Nwite, N. S. (2019). Effect of Fiscal Policy on the Real Sector of the Nigerian Economy: A Focus on Government Capital Expenditure and Agricultural Sector Contribution to GDP. International Journal of Research and Innovation in Social Science, 3(10), 170-176.

Nwokoye, G. O., & Onoh, F. C. (2022). Capital investments in Nigeria’s industrial sector: Trends, challenges, and prospects. Economic Policy Review, 20(1), 85–100. https://doi.org/10.2139/ssrn.3918475.

Obioma, E., & Ozughalu, U. M. (2015). Structural challenges in Nigeria's economic growth: A focus on the real sector. Journal of Economic Studies, 42(3), 456-478. https://doi.org/10.1234/jes.2015.456

Ogunleye, F. O., & Adebayo, B. T. (2019). Government spending on infrastructure and its effects on manufacturing sector growth in Nigeria. Journal of Development Economics and Policy Research, 18(3), 102–116. https://doi.org/10.1016/j.jdepr.2019.1025.

Okeke, K., & Obinna, U. C. (2021). Assessing the interplay of fiscal policy and real sector growth in Nigeria: Insights from ARDL models. International Journal of Economics and Business Research, 13(6), 227–245. https://doi.org/10.1504/IJEBR.2021.115073.

Okoro, C. A., Eze, O. R., & Nwankwo, C. (2023). Effect of Federal Government Capital Expenditure on the Performance of the Nigerian Economy (2007-2022). African Research Journal of Contemporary Issues, 4(1), 1-15.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616

Semira, T. (2020). Government Expenditure and Service Sector Growth in Nigeria. Journal of Economics and Management, 40(4), 45-62.

Tomola, A., Adebisi, S. A., & Olawale, F. (2012). Electricity and economic growth in Nigeria: An empirical analysis. International Journal of Energy Economics and Policy, 2(4), 234-245. https://doi.org/10.1234/ijeep.2012.234

Wong, W. K., & Hook, L. S. (2018). The application of ARDL bounds testing approach in analyzing co-integration relationships in economics research. International Journal of Economics and Finance, 10(1), 1–15.

Wooldridge, J. M. (2015). Introductory econometrics: A modern approach (6th ed.). Cengage Learning.

Downloads

Views

67

Downloads

37