Public Expenditure and Economic Growth in Enugu State: An Empirical Assessment (2015 to 2024)

The relationship between public expenditure and economic growth remains a subject of sustained analytical inquiry, particularly in developing economies where government spending constitutes a major driver of economic activity. This study empirically assesses the impact of public expenditure on economic growth in Enugu State from 2015 to 2024, drawing on annual budgetary and output data. The study is anchored on Wagner's Law of Expanding State Activity, which predicts a positive long-run relationship between government spending and economic development as economies grow in complexity. A longitudinal research design was adopted using time-series secondary data sourced from the Enugu State Ministry of Finance and the National Bureau of Statistics. Autoregressive Distributed Lag (ARDL) bounds testing was employed to examine both short-run dynamics and long-run relationships. The study's analytical population is the state's annual macroeconomic data spanning a decade. Findings reveal that capital expenditure has a significant positive effect on state economic output, while recurrent expenditure exhibits a positive but less robust relationship, constrained by administrative overhead inefficiencies. The results are consistent with Wagner's Law in the Enugu State context over the study period. The study concludes that targeted capital investment remains the most potent lever for state-level economic growth. It is recommended that Enugu State policymakers prioritize infrastructure and human capital spending while aggressively reducing non-productive recurrent costs through fiscal consolidation reforms.

Keywords: Public expenditure, economic growth, Wagner's Law, Enugu State, fiscal policy