Government Budgeted Expenditure and Rural Development in Selected Local Government Areas of Akwa Ibom State, Nigeria

Abstract

Government expenditure budget plays a crucial role in facilitating local government development, as it determines the allocation of resources for various public goods and services. The study aimed to evaluate the impact of recurrent and capital estimates on rural development in selected local government areas of Akwa Ibom State. The research used allocation of resource theory and used data from the 2016-2022 fiscal year budget estimates. The study applied panel data models on annual data of government budgeted expenditure and rural development within the scope. In order to circumvent endogeneity problems, panel estimation techniques of fixed and random effects was adopted. Panel data estimation allows for the control of individual-specific effects usually unobservable which may be correlated with other explanatory variables included in the specification of the relationship between dependent and explanatory variables using Haussmann test. The results showed that recurrent and capital expenditure had positive and non-significant effects on economic, social, and administrative sectors. Recurrent expenditure had a negative and non-significant effect on social service sector development, while capital expenditure had a positive and non-significant effect. The study recommends among others that local governments in Akwa Ibom State should increase their capital budget estimates and internal revenue efforts to raise funds for rural development.