FISCAL FEDERALISM AND ECONOMIC DEVELOPMENT IN NIGERIA: AN ECONOMETRIC ANALYSIS

Emeka Nkoro; Godly Otto

doi:10.52950/ES.2023.12.1.007

Authors

Emeka Nkoro Department of Economics, University of Port Harcourt, Nigeria Author
Godly Otto Department of Economics, University of Port Harcourt, Nigeria Author

DOI:

https://doi.org/10.52950/ES.2023.12.1.007

Keywords:

Fiscal Federalism, Revenue Decentralization, Expenditure, Economic Development, ARDL Approach

Abstract

This study examines the impact of fiscal federalism on economic development in Nigeria over the period from 1981 to 2020 using annual time series data. Both revenue and expenditure decentralization are used as measures of fiscal federalism. Analytically, the study employs the autoregressive distributed lag approach. The results reveal that in the long run, revenue and expenditure decentralization have a positive and significant impact on economic development in Nigeria, a finding that has been validated by many scholars. This finding shows that true fiscal federalism is better captured by both subnational revenue and expenditure decentralization. Given these findings, the study suggests that more fiscal power should be devolved to state and local governments in Nigeria through appropriate legislation.

Data:
Received: 1 Feb 2023
Revised: 23 Mar 2023
Accepted: 17 Apr 2023
Published: 1 May 2023