ABSTRACT

It is undisputed that government generates revenues from taxes, oil extraction and exportation to finance public goods such as economic infrastructure, social services and for the operation of government itself. For this reason lack of revenue will be a major obstacle to economic growth. in Nigeria, it appears that a step increase in public revenue due to the surge in natural resources wealth and the contribution of non oil revenue rarely improved the much needed public goods and the general wellbeing of the citizen. Indeed, quite the opposite happen. On the bases of this, the effects of pubic revenues on economic growth were investigated in Nigeria from 1980 -2008. We employed two method of analysis. The descriptive method and the econometric method. Finding from the descriptive analysis shows that the growth rate of oil revenue is volatile as compared to the growth rate of both non oil revenue and federal government revenue; however oil revenue still dominates public revenue. While finding from the econometric model shows clearly that public revenue and economic growth have a long run relationship which suggests that the model to use is the vector error correction model which measures the speed of adjustment of the long run to converge to their short run equilibrium. The result of the vector Error Correction model shows that the RGDP parameter is correctly signed with a 42% speed of adjustment in the short run to reach equilibrium level in the long run. The result of the Granger causality test reveal that public revenues does not granger cause RGDP neither does Economic growth Granger cause public revenues. Based on the finding we highlight some major issues that policy makers should consider for effective usage of public revenues                                                                                                                            toward growth enhancement.

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