Fiscal Policy and Economic Growth in Nigeria: A Comparative Analysis with Emerging and Industrialized Economies

Abstract

This study examines the impact of fiscal policy on economic growth in Nigeria, from the military to the current civilian administration. The study demonstrates the effectiveness of fiscal policy in supporting economic growth, particularly in low-income countries with macroeconomic disparities, by a comparative comparison of developing and industrialized economies. Keynesian economic theory was used in the investigation. Many people consider the British economist John Maynard Keynes (1883–1946) to be among the most significant thinkers of the 20th century. The study utilized documentary research methodology and qualitative analysis, the study reveals that fiscal adjustment is a crucial driver of growth, primarily through its impact on factor productivity. Furthermore, the findings show that improving public investment and safeguarding capital expenditure during fiscal adjustment are essential for encouraging economic growth. Conversely, shifts in spending priorities that favor public-sector wages and salaries can potentially stifle growth due to their association with rent-seeking behavior. Based on these findings, the study recommends that policymakers should prioritize efficient distribution and utilization of public resources, to strengthen the Nigeria Central Bank's capacity to address economic challenges, and incorporate seasoned administrators and economists into the nation's economic recovery team. By implementing these measures, Nigeria can adequately promote inclusive and sustainable economic growth, ultimately enhancing the well-being of its citizens.