STOCK MARKET DEVELOPMENT AND INDUSTRIAL GROWTH IN NIGERIA: AN IMPACT ASSESSMENT ANALYSIS

ABSTRACT

This study examined the impact of government size on economic growth in Nigeria for the period of 1981-2019. The main objective of this research work is to examine the impact of government size on economic growth in Nigeria and the specific objectives of this research work are to examine the trend in government size, to examine the trend of economic growth, to estimate the relationship between government size and economic growth, and finally to make recommendations on appropriate policies. The study used Error Correction Mechanism (ECM) to examine the relationship between government size and industrialization in Nigeria. The study found that the level of total government expenditure is positively related to the Real GDP and exchange rate is negatively related to the Real GDP and gross fixed capital formation is negatively related to the Real GDP and inflation is also negatively related to the Real GDP. The study therefore recommends that Government expenditure positively and significantly improves the economy and so conscious efforts should be carried out by the government to increase budgetary allocation to productive sectors of the economy for public spending is a key factor that contributes greatly to economic growth and development. It is essential for financing infrastructure, including roads, electricity, and water. It provides the health and education services necessary for modern economies more efficiently and effectively than the market could provide. Also, excessive increase in government expenditure has to be checked. Government needs to make sure that increment in government expenditure does not hurt the economy, particularly the welfare of people within the country.