The Import of Fiscal Policy for Real Sector Productivity in Nigeria

Abstract

The real sector otherwise known as the productive sector of every economy, mostly in the developing economy like ours (Nigeria) forms the base for producing goods and services needed for human and industrial consumption within the country and for trading in the foreign market. This critical role of the sector may be hampered if adequate budgetary provisions are not made to the sector. It was in line with this contemporary finance wisdom that the researchers investigated the import of fiscal policy on the productivity of the real sector in terms of total output. The desk research design, annual time series data on the variables from Central Bank of Nigeria (CBN) statistical bulletin, multiple linear regression technique, including pre-estimation analysis using E-views were the employed components of research method. The study based on a disaggregated approach of analysis revealed among other things, a long-run positive and statistically significant nexus between allocations to the construction sub- sector and actual budget and real sector output in consonance with the a priori expectations, an inverse relationship between allocation to agriculture and real sector output and an insignificant relationship between budgetary allocations to both manufacturing, oil and gas sub-sectors and real sector outputs. We therefore recommend amongst other things, additional and enhanced allocations to the agricultural, manufacturing, oil and gas sub-sectors and more local as well as foreign investments in the areas of agriculture and manufacturing given available market potentials.

Keywords

• Fiscal policy
• real sector productivity
• Budgetary allocation
• Federal budget

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