FISCAL FEDERALISM AND ECONOMIC GROWTH IN NIGERIA

Ahmed, Ayodele Victor and Falaye, Adebanjo Joseph and Oloni, E.F. and Okeke, Joseph (2017) FISCAL FEDERALISM AND ECONOMIC GROWTH IN NIGERIA. Nigerian Journal of Banking, Finance and Entrepreneurship Management. (In Press)

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Abstract

Persistently, it is being insinuated that Nigerian federalism is one of the major challenges hindering the country’s economic growth and development. This study analysed the effects of fiscal federalism on the growth of the Nigerian economy. This study made use of data on annual revenue allocations to the federal, state, and local governments, and annual investments, as the independent variable, and annual real Gross Domestic Product as the dependent variable. The study employed the Ordinary Least Square method for estimation, and the Augmented Dickey-Fuller Unit Root Test to check for the statistical properties of the variables. The results show that it is only at the federal level that allocation is positive and significant. At the local government level, the allocation is positive but not significant and at the state level, it is even negative but not significant. Recommendations were made to improve the impact of fiscal federalism on economic growth in Nigeria; among such include the establishment of agencies to check for fraudulent activities in the lower levels of government, and a development of self-sustainable income levels by the lower levels of government.

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