1.1 BACKGROUND OF THE STUDY
Over the years, government expenditure also known as government spending has been identified as a major tool in improving the standard of living of citizens in a country. Various spending on recurrent and capital projects such as such as building of schools, provision of good and affordable health care, payment of salaries/casual wages, provision of good roads, electricity and clean water are determinants of standard of living (Morris, 1987). Increased spending on these infrastructures has the tendency of improving standard of living in a nation. For instance, policy interventions to reduce mortality may require increasedpublic spending or, similarly, it may be necessary to spend more on educationalprograms that aim to increase primary completion rates. However, what mattersis not only how much was spent but also how effectively this money was spent,there are a handful of countries that suggest an inconsistent relationship betweenchanges in public spending and outcomes. For example, Thailand has increasedpublic spending on primary schooling more than Peru did, yet primary schoolcompletion fell in Thailand and increased in Peru. Likewise, an analysis ofMalaysia over the late l980s found little association between public spendingon doctors and infant mortality, and the increased construction ofpublic schools in Indonesia that occurred in the 1970s did not have a significantpositive impact on school enrollments. The cross-country association betweenpublic spending and outcomes, after controlling for national income, is found tobe statistically and substantively weak. The message is not that public fundingcannot be successful; rather, it is commitment and appropriate policies, backed byeffective public spending that can achieve these goals.
Public expenditure is not always effective in providing quality services and reaching the intended beneficiaries, who are often the poor, and this partly explains why spending has a weak relationship with outcomes. Another reason for such a weak relationship is the interaction between the private and public sectors
Increasing public provision may simply crowd out, in part or in whole, equally effective services offered by non-government providers. Unless resources supporting services that work for poor people, the public resources spent on these services willnot get the optimal outcome. If more public money is spent on services and more of that money is spent on services utilized by the poor, the spending pattern willdetermine the efficacy of spending. For instance, wages and salaries of teacheron average account for 75% of recurrent public expenditure on education. There is no doubt that teachers’ play a critical role in the schooling process and given;them adequate incentives is important; however, spending on other vital input(such as textbooks) is also important. Too much spending on one input will have a negative impact on the quality of learning. To address this, governments must tackle not only the technical or managerial questions of how much to spend on one input relative to another, but also the institutional and political contexts that generate these decisions ( Son, 2009).
1.2 STATEMENT OF THE PROBLEM
Most poor Nigerians do not get their fair share of government spending an publicservices such as in health and education. Benefit incidence analysis on public expenditureprovides a clearer picture of who benefits from government spending. Evidencelargely suggests that the poorest fifth of the population receives less than a fifth of education and health expenditures, while the richest fifth gets more: 46% ofeducation spending, and the poorest receive only11% (Filmer 2003), Similarly, in other developing countries such as India the richest Eight receives three times thecurative health care subsidy of the poorest Eight. One reason for this imbalance isthat spending is biased toward services mainly utilized by richer people; anotherreason is that while channeling public spending toward services utilized by thepoor helps, such services may not be reaching the targeted beneficiaries.
1.3 RESEARCH QUESTIONS
The research questions formulated to guide the study are:
· Does government expenditure exert any significant impact on standard of living in Nigeria?
· Has government spending contributed to improved standard of living of her citizens?
· Has government expenditure on education and health care had any significant impact on standard of living in Nigeria?
1.4 RESEARCH OBJECTIVES
The main aim of the study is to examine the impact of government expenditure on standard of living. Specific objectives of the study are:
1. To examine the impact of government expenditure on standard of living in Nigeria.
2. To determine the whether increase in government spending has improved the standard of living of the people of Nigeria.
3. To examine whether government expenditure on education and health care has had significant impact on the standard of living in Nigeria.
1.5 RESEARCH HYPOTHESIS
1. Ho: There is no significant relationship between government expenditure and standard of living in Nigeria.
Hi: There is a significant relationship between government expenditure and standard of living.
2. Ho: Increase in Government expenditure has no significant impact standard of living in Nigeria.
Hi: Increase in Government expenditure has a significant impact on standard of living in Nigeria.
3. Ho: Government expenditure on education and health care has no significant impact of standard of living in Nigeria.
Hi: Government expenditure on education and health care has a significant impact on standard of living in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY.