Sectoral Allocation and Economic Wellbeing in Nigeria

Abstract

This study examines the relationship between sectoral allocation and economic wellbeing in Nigeria, with a focus on identifying the most effective sectors for improving economic outcomes. The research employs a comprehensive framework, considering various sectors, including administrative services, economic services, social and community services, and transfer payments. The study used autoregressive distributed lag (ARDL) estimation techniques due to the mixed stationary condition of the annual time series data, which was sourced from the Central Bank of Nigeria Statistical Bulletin 2024. The findings of this study reveal that the sectoral allocation of government expenditure plays a crucial role in shaping economic wellbeing in Nigeria. Specifically, the results show that government spending on transfer payments, administrative services, and social and community services has a significant positive impact on economic wellbeing. In contrast, expenditures on economic services are found to have an insignificant negative relationship with economic wellbeing. Furthermore, the study highlights the importance of transparency and accountability in government spending. Corruption and misallocation of funds are identified as major challenges that undermine the effectiveness of sectoral allocations in improving economic wellbeing. Based on these findings, the study recommends that policymakers prioritise transparency and accountability in government spending. Establishing stronger monitoring and evaluation frameworks is suggested as a key strategy for ensuring that allocated funds reach their intended sectors and produce measurable welfare outcomes. The results of this study have important implications for policymakers seeking to optimise government expenditure and improve economic wellbeing in Nigeria.