Estimating the Size of Construction Industry Expenditure for Economic Development and Sustainability in Nigeria: Autoregressive Distributed Lag (ARDL) Approach

Abstract

The expansion of annual capital budget over the years without a corresponding increase in the volume and quality of infrastructural development in Nigeria has been attributed to those factors assumed to have great impact on the economic performance of the country. This study examined the effect of selected economic factors on the size of construction sector expenditure in Nigeria using economic data from 1981-2020. It employed econometrics statistics. The result revealed that there was a long-run co-integration among the variables with ARDL bound estimate values of F-stat. (7.40) and t-stat. (-6.56) respectively. These are higher than both the lower and upper bound critical values at 1%, 2.5%, 5% and 10% respectively. The result further revealed that exchange rate, oil prices, population, trade openness, foreign direct investment, unemployment rate, public debt and real GDP were important determinants of the size of construction sector expenditure in Nigeria. It also revealed that construction output, inflation rate, government revenue and taxation had trivial determinants due to issues relating to policy, management and execution of capital budget. The study suggested that government should make and implement apposite policies, and be diligent in allocation and management of public fund to ensure a sustainable economy through infrastructural development.