article · World Development Sustainability
Poverty reduction in Nigeria is closely tied to sustained investment in public infrastructure. An evaluation covering the period from 1996 to 2019 assessed public expenditure across economic services, such as capital spending, as well as social infrastructure, including health and education. The evidence confirms that infrastructure development significantly contributes to reducing poverty. Furthermore, the causal link between infrastructure spending and poverty alleviation operates in both directions over the long run. Greater infrastructure expenditure directly lowers poverty levels, while declining poverty improves public sector performance, leading to more efficient resource allocation for future development projects. Given the recognised deficit in infrastructure across developing nations, introducing and maintaining sustainable infrastructure investments serves as an effective mechanism for continuous poverty alleviation and enhanced governance.
Understanding how infrastructure expenditure influences poverty helps decision-makers prioritise critical public investments. When nations fund utilities, transport, schools, and healthcare, living standards rise. This progress creates a reinforcing cycle where reduced poverty supports better public administration and more effective allocation of future resources, fostering broad and durable economic development.
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This study provides an adequate account of the effect of infrastructure on poverty reduction in Nigeria over the period 1996–2019. The basis of evidence is anchored on the adoption of Autoregressive Distributed Lag bounds testing approach to cointegration and Granger causality test based on vector error correction mechanism. Using economic infrastructure spending (capital expenditure on economic services) and social infrastructure expenditure (like health and education) as infrastructure investment indicators, findings indicate that infrastructure development is found to be significant to poverty reduction. In addition, the causal direction between infrastructure and poverty seems to be bidirectional in the long run. This implies that improving infrastructure investment could be key to enhancing poverty-reducing effect, while poverty reduction would possibly engender better performance in the public sector, thereby resulting in efficient and effective allocation of resources towards developing substantial infrastructure. Hence, it is posited that with growing awareness that the provision of infrastructure in most developing countries, including Nigeria, is inadequate, introducing and implementing new and sustainable infrastructure investments are critical to ensuring poverty alleviation.
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DOI: 10.1016/j.wds.2022.100006
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