Public Expenditure
TABLE OF CONTENTS
1. Introduction
2. Theoretical review a. The Nature and Classification of Public Expenditure b. Theories of Public Expenditure c. Causes\ Goals of Public Expenditure d. Effects Of Public Expenditure
3. Conclusion
Introduction
Economic theory postulates that government or the state has 5 basic functions: 1. Promotion of economic growth and development 2. Maintenance of price stability 3. Seek favourable balance of payment 4. Facilitate full employment of factors of production. 5. Promote equitable distribution of wealth and income. To enable it fulfill these functions, the State incurs expenditure on such items as personnel costs e.g. salaries and training allowance, cost of building and maintaining infrastructure like roads, rails and other public utilities, transfer payments such as pensions, gratuities, subsidies, and scholarships. Prior to 1960, the colonial authorities had focused only on areas that would benefit it. Thus, for instance, rails were constructed mainly to link the sea ports to the hinterland, the objective being to facilitate easy evacuation and export of raw materials to feed British factories. The rail network also helped in distributing the finished goods from the sea ports when they were imported. No attempt was made to develop local industries because that would create unwelcome competition for Her Majesty’s citizens and reduce the size of their market. A similar trend played out in the educational sector where emphasis was placed on the training of teachers and clerical staff. The production of competent hands in areas related to science and technology were downplayed or neglected entirely. Nigerians were made to believe that technical matters were better handled by Westerners and that they should be content with being second in line. Essentially, the colonial authorities felt its interests were best served by keeping
1. Introduction
2. Theoretical review a. The Nature and Classification of Public Expenditure b. Theories of Public Expenditure c. Causes\ Goals of Public Expenditure d. Effects Of Public Expenditure
3. Conclusion
Introduction
Economic theory postulates that government or the state has 5 basic functions: 1. Promotion of economic growth and development 2. Maintenance of price stability 3. Seek favourable balance of payment 4. Facilitate full employment of factors of production. 5. Promote equitable distribution of wealth and income. To enable it fulfill these functions, the State incurs expenditure on such items as personnel costs e.g. salaries and training allowance, cost of building and maintaining infrastructure like roads, rails and other public utilities, transfer payments such as pensions, gratuities, subsidies, and scholarships. Prior to 1960, the colonial authorities had focused only on areas that would benefit it. Thus, for instance, rails were constructed mainly to link the sea ports to the hinterland, the objective being to facilitate easy evacuation and export of raw materials to feed British factories. The rail network also helped in distributing the finished goods from the sea ports when they were imported. No attempt was made to develop local industries because that would create unwelcome competition for Her Majesty’s citizens and reduce the size of their market. A similar trend played out in the educational sector where emphasis was placed on the training of teachers and clerical staff. The production of competent hands in areas related to science and technology were downplayed or neglected entirely. Nigerians were made to believe that technical matters were better handled by Westerners and that they should be content with being second in line. Essentially, the colonial authorities felt its interests were best served by keeping
References: Ilugbuhi, T.O. (1974), Nigeria’s Experience in Domestic Financing of Development Research Memo Series Institute of Administration (Zaria: ABU) of Finance and Economics ISSN 1450-2887 Issue 54 (2010) EuroJournals Publishing, Inc http://www.eurojournals.com/finance.htm Akinnifesi, E.O.(1978), ‘The Determinants and Control of the Money Stock in Bhatia, H.L. (2008).Public Finance Vikas Publishing House PVT Ltd, New Delhi Pigou, A.C Omoruyi, S.E. (1988), The Fluctuation of Federal Government Expenditures: A Statistical Analysis Gerson, P. (1998), The Impact of Fiscal Policy Variables on Output Growth, IMF Working Paper International Monetary Fund Anyafo, A.M.O. (1996) Public Finance in Developing Economy: The Nigerian Case UNEC Publications, Enugu Josaphat, P. K and Oliver M (2000) Government Spending and Economic Growth in Tanzania, 1965-996: Credit Research Series Academic Press Nairobi