Public Education Expenditure and Economic Growth in Nigeria: A Disaggregated Approach

This study examines the effects of the components of public education expenditure on both education attainment and economic growth in Nigeria from 1970 to 2010.The Instrumental Variable Two Stage Least Squares estimation technique is employed to test the hypothesis that both recurrent and capital expenditure on education have different effects on education attainment and economic growth. The result reveals that public education expenditure has both direct and indirect effects on economic growth. The indirect channel has been more relevant for economic growth in Nigeria. Thus, total public education expenditure can promote economic growth without necessarily first improving education attainment.. The study also reveals that recurrent and capital expenditure on education have different effects on economic growth. While recurrent expenditure had a negative impact on education, capital expenditure was found to have appositive impact. On the contrary, recurrent education expenditure had a positive and significant impact on economic growth while capital expenditure had a negative impact. However, to maximize the benefits from public education expenditure, strategies that ensure greater efficiency of public education expenditure are suggested.