APPROPRIATION HYPOTHESES OF PUBLIC EXPENDITURE by Uzochukwu N. Azuonwu (2019)

Wagner; Peacock and Wiseman; and Musgrave are of view that increase involvement of the government on social activities of the state, administrative and welfare functions increases public expenditure and in return drive economic growth and standard of living within the nation.

Yes! But for public expenditure to drive economic growth; the funds must be well appropriated; that is, channeled to solving social and economic needs; and the budget items must be well financed and monitored.

But when funds are misappropriated: social, economic and welfare needs will accumulate then the existing infrastructure will deteriorate and citizen’s lives will worsen of; and the outrageous societal problems will lead to illusional and illusive governance (case of Nigeria).

1.     Hypothesis One (RESPONSIVE HYPOTHESIS): When government (managers of fund) is responsible and responsive to the social and economic problems; channel funds to those basic/pressing areas such as: education, building of road, electricity, industrial revolution and agricultural facilities which will increase economic activities. Then public expenditure will impact insignificantly on economic growth. And there will be no repetition on allocation of fund on same items.

2.     Hypothesis Two (IRRESPONSIVE HYPOTHESIS): Despite the increasing public expenditure, if government (fund manager) fails to be responsible and responsive to economic and societal problems. Public expenditure will not drive economic growth. Because public funds will be misappropriated, then social, economic and welfare problems will accumulate and existing infrastructures will deteriorate.

The work studied the public expenditure of Nigeria and its relationship on economic growth from 1981 to 2018. And it was found that the astronomical raise on public expenditure over the years has not replicate on economic growth within the country; as the nation is yet to achieve the basic economic and social needs such as: good road, stable electricity supply, quality education, quality medical facilities, quality education among others, despite the huge yearly budget on these items.