CORRUPTION, GOVERNMENT EXPENDITURE AND ECONOMIC GROWTH IN NIGERIA
Abstract
The paper investigated the effect of corruption and government expenditure on economic growth as well as the pass-through effect of corruption to economic growth through government expenditure in Nigeria between 1981 and 2015. The study made use of the Vector Error Correction Model and Impulse Response Function. Six variables of real gross domestic product (RGDP); corruption perception index (CPI); government expenditure (GOVEXP); index of openness (IOP); inflation rate (INF) and gross fixed capital formation (GFCF) were used for the study. The model variables were tested using the Augmented Dickey Fuller Test and were found stationary at first difference. The study found out that, while corruption has negative effect on economic growth, government expenditure affects economic growth positively. The study also found out that corruption flitters away the gains to the economy due to increase in government expenditure. It therefore recommended that the fight against corruption should be stepped up and policies should be evolved to ensure that all monies expended by the government in the economy are fully tracked and accounted for.
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