PUBLIC HEALTH EXPENDITURE AND ECONOMIC GROWTH IN NIGERIA: A MULTIVARIATE VECTOR ERROR CORRECTION AND CAUSALITY FRAMEWORK

This study investigates the relationship between public health expenditure and economic growth in Nigeria from 1990 to 2025 using a Vector Error Correction Model (VECM) and Granger causality framework. Incorporating education, capital formation, and inflation within a multivariate analysis, the study finds that government health expenditure exerts a positive and statistically significant long-run effect on economic growth (coefficient = 0.1434; t = 2.4463). Conversely, secondary school enrolment shows a significant negative relationship with growth (coefficient = −15.2462; t = −2.1816), indicating quality-related challenges in Nigeria’s education system. Capital formation and inflation demonstrate insignificant long-run effects. The error correction term reveals rapid adjustment to long-run equilibrium following short-run disturbances. Granger causality tests confirm unidirectional causality from capital formation and education to GDP growth, while growth Granger-causes health expenditure, suggesting that economic expansion precedes health spending. The study concludes that public health investment significantly drives long-term growth in Nigeria, but education quality requires urgent policy attention to enhance its growth contribution.