Modelling Disaggregated Government Expenditure and Manufacturing Sector Performance Nexus and their Influence on Economic Performance

The study investigates the influence of manufacturing sector performance and disaggregated government expenditure on economic performance in Nigeria. Government expenditure is disaggregated into social and community services and economic services. The study employed and makes use of time series data from 1981 to 2020. Data on manufacturing sector performance, government expenditure on social, government expenditure on community services and economic services, foreign direct investment, interest rate, population and economic growth were sourced from Central Bank of Nigeria statistical bulletin, World Development Indicators and Nigeria Bureau of Statistics. The Unit root test shows that all variables except foreign direct investment and population are stationary at first difference and the bounds test confirms existence of long run relationship among the variables at 5% significant level. The econometric technique used in estimating the VAR model to run the causality test is the Toda-Yamamoto model while Autoregressive Distributed Lag Model (ARDL) model was the estimation technique used to analyze the main objective of the study to generate short run and long run result. The econometric model estimated reveals that manufacturing sector performance, foreign direct investment, government expenditure on community and social services have a positive and significant impact on economic performance while government expenditure on economic services have a negative and significant impact on economic performance while interest rate does not have a significant impact on economic performance.