INVESTIGATING THE IMPACT OF COST OF GOVERNANCE ON ECONOMIC DEVELOPMENT IN NIGERIA FROM 1993 TO 2023

ABSTRACT This study investigated the impact of cost of governance on the development of Nigeria using annual time series data for the period 1993-2023. The main objective of this research work is to evaluate the impact of cost of governance on the development of Nigeria. In this paper, the Augmented Dickey-fuller(ADF) test was used to test for the stationarity of the variables. The result obtained showed that the variables stationarity status were of a mixed order. Moreover, the ARDL Bound Test Co-integration technique was used to establish if the stationary variables are co-integrated in the long run. Also, the Autoregressive Distributed Lag Model was used as the technique of analysis whereby the long and short run models were estimated. The results so obtained revealed that the model is well specified and could be used for policy analysis. Data used for the analysis were extracted from the Central Bank of Nigeria (CBN) statistical bulletin and the World Development Indicators (WDI). The results of the analysis revealed that all the explanatory variables of the model were significant to a large degree in explaining development as proxied by components of the HDI in the short run. However, in the long run, only Federal and Local government total expenditures significantly impacted development. In the short run, Federal government total expenditure was positive in 2 of the 3 models while it was significant in 2 of the 3 short run models of which it was positive in one and negative in the other. In the long run, Federal government total expenditure had the direct opposite of the short run model results. In the short run, State government total expenditure was negative in all models but significant in one. However, in the long run it was positive in all 3 models but insignificant in all. Lastly, Local government total expenditure had a positive relationship in all three short run models but was only significant in one. In the long it was positive in 2 of the 3 models but was only significant in one. The sign and statistical significance of the speed of adjustment represented by the coefficient of the ECM and seen as the converging force between the long and short run models were appropriate and in conformity with a priori and statistical expectations in all the models of the study. Based on its findings, the study suggested that the Federal government of Nigeria increase the statutorily allocation to the Local government councils with the aim of correcting the mismatch between expenditure and revenue assignments at the grass root level; while also ensuring its independence. The research also recommends that the Public Expenditure Tracking Survey (PETS) mechanism be adopted to guard against frivolous spending. However, the crux of the recommendations was that more resources be devoted to developmental projects specifically at the grass root leve