Fiscal decentralization, economic growth and human resource development in Nigeria : Autoregressive Distributed Lag (ARDL) approach

There is a widespread belief that fiscal decentralization is an effective tool for increasing the efficiency of public expenditures. Decentralization is expected to boost accountability and transparency in the provision of public goods for the well-being of the society. However, countervailing views maintain that little or no impact has been created at the periphery in terms of improving the welfare of the people in Nigeria. The main objective of this paper was to investigate how the decentralized system of expenditure impacted on human resource development in Nigeria. Using ARDL/Bounds Testing approach and data for the period 1980 to 2012, the study found that expenditure decentralization exerted negative effect on human resource development. The pattern and nature of expenditure decentralization in Nigeria, in the long-run, seemed to support inefficient application of resources with increased cost of governance rather than ensuring cost effectiveness in the provision of public services. The study recommends that transparency and accountability at all levels of government is required to make fiscal decentralization supportive of economic growth and human resource development.