Effects of Public Sector Investment in Transportation Infrastructure on Economic Growth in Nigeria

Abstract

ABSTRACT: This study investigates the effects of public investment in transportation infrastructure on economic growth in Nigeria over the period 2000–2024. The dataset is sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin, National Bureau of Statistics (NBS), and the World Development Indicators (WDI, World Bank) Real Gross Domestic Product (RGDP) is employed as the dependent variable, while public investment in transportation infrastructure (PITI), road construction expenditure (RCE), total capital expenditure (TCE), and inflation (INF) serve as the explanatory variables. Anchored on the Keynesian multiplier theory, the study adopts the Autoregressive Distributed Lag (ARDL) model, following preliminary descriptive, correlation, and unit root tests. The empirical findings reveal that public investment in transportation infrastructure has a positive and statistically significant long-run effect on economic growth, while road construction expenditure and total capital expenditure exert positive but statistically insignificant effects. Inflation shows a negative but insignificant relationship with growth. The short-run results indicate delayed adjustment effects, with the error-correction term confirming a stable convergence to long-run equilibrium. Diagnostic tests show no evidence of serial correlation, heteroskedasticity, misspecification, or model instability. The study concludes that sustained and efficient investment in transportation infrastructure is crucial for long-term economic growth in Nigeria. It recommends improved project execution, macroeconomic stability, diversification of transport infrastructure, and stronger governance mechanisms to enhance the growth impact of public spending.