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Revenue Allocation and Economic Development in Nigeria

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  • Dagwom Yohanna Dang

Abstract

This study empirically examines the impact of revenue allocation on economic development in Nigeria. Specifically, the study looks at how the various revenue allocations to the three tiers of government affect real gross domestic product (RGDP) in Nigeria using time series data for the period 1993 to 2012. Error correction model (ECM) and Pairwise Granger Causality test are used in analyzing the data. The study carries out test of stationarity of the variables using Augmented Dickey–Fuller unit root test and test of long-run relationship among the variables using Johansen Cointegration test. The study’s findings show that revenue allocations have significant causal relationship with economic development in Nigeria, with only revenue allocation to states having significant negative relationship. Unidirectional causality runs from revenue allocations to real GDP in Nigeria. All variables of the study are cointegrated and have a long-run relationship that 87.62% of the short-run disequilibrium is corrected yearly. The study recommends among others that more financial control and value for money audit should be carried out to minimize wastages and corruption in the states of the federation, so as to change the direction of influence of states’ revenue allocation on economic development.

Suggested Citation

  • Dagwom Yohanna Dang, 2013. "Revenue Allocation and Economic Development in Nigeria," SAGE Open, , vol. 3(3), pages 21582440135, September.
    • Handle: RePEc:sae:sagope:v:3:y:2013:i:3:p:2158244013505602
    DOI: 10.1177/2158244013505602
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    References listed on IDEAS

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    1. Bayan Mohamad Alshaib & Abdullah Mohammad Ghazi Al khatib & Alina Cristina Nuta & Mohamad Hamra & Pradeep Mishra & Rajani Gautam & Sarfraz Hussain & Cristina Gabriela Zamfir, 2023. "Fiscal Sustainability and Its Implications for Economic Growth in Egypt: An Empirical Analysis," SAGE Open, , vol. 13(4), pages 21582440231, December.
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    3. OJO, Oyetunde Olumuyiwa & OYEDELE, Kayode Samson, 2018. "Effects Of Revenue Generation On Rural Economic Development In Orolu Local Government Area(Lga), Ifon Osun, Osun State, Nigeria," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(46), pages 57-70, November.

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