Journal of Emerging Trends in Economics and Management Sciences: Home

Abstract:
Fiscal federalism in Nigeria has not produced the desired impact since its inception in 1946. Despite continuous increase in revenue generation and allocations, the expected impact on economic growth and national development has not been encouraging. This study examines the impact of resource allocation and fiscal balance on economic growth and national development. The multiple regression model was used and various tests were conducted. The analysis shows a negative relationship between Nigeria national development and capital expenditure, and fiscal balance. Only recurrent expenditure has a positive relationship with development. The coefficients of TCE and TFB show a negative impact on economic growth which implies an indirect relationship between GDP and total capital expenditure, and fiscal balance. The Nigerian economy has not been able to save and gainfully invest a correct proportion of her GDP. The fiscal framework in Nigeria has not made significant contribution to economic and national development. The fiscal framework is therefore weak to grow the economy and move the country in the desired direction. We recommend a fiscal framework and system that focuses on fiscal decentralization, such that capital investment in the states and local governments of the federation would be enhanced. The relationship between recurrent expenditure and national development is a potential aspect for further research. However, the recurrent expenditure framework should be reviewed downwards so as to release more funds for capital expenditure to encourage investment in both the private and public sectors of the economy. This study is of immense significance to students, scholars and researchers in Public Policy. Government officials and consultants in fiscal policy would also find the study to be a useful guide.

Keywords: fiscal federalism, resource allocation, expenditure, economy, fiscal balance, framework, economic growth, national development

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