<![CDATA[Government spending plays a vital role in the growth of various sectors and in improving economic performance, particularly in Nigeria. Despite increased government expenditure, the service sector's expansion has been slow, raising concerns about the effectiveness and composition of this spending. This study investigates the impact of government spending on the service sector's growth in Nigeria from 1981 to 2024, focusing on government capital expenditure, recurrent expenditure, and inflation's effects on service output. Utilizing a descriptive ex-post facto research design, the study analyzed secondary data sourced from the Central Bank of Nigeria Statistical Bulletin. An Autoregressive Distributed Lag (ARDL) model facilitated the examination of both long-term and short-term relationships among the variables. In long-term analysis, government capital expenditure was found statistically insignificant but showed a positive relationship (β = 4.328398, p = 0.0601). Conversely, lagged government recurrent expenditure significantly and positively influenced service sector growth (β = 14.77671, p = 0.0000). Inflation negatively impacted service sector growth, though the effect was not statistically significant. In the short-term, however, government recurrent expenditure exhibited a negative and significant impact on the service sector's growth, indicating that inefficiencies within government spending undermine its effectiveness. The study concludes that while government expenditure can foster long-term growth in the service sector, short-term inefficiencies diminish its potential impact. It advocates for fiscal discipline, optimal expenditure allocation, and greater investment in productive infrastructure as essential strategies for securing sustainable growth within Nigeria's service sector. The findings underscore the importance of developing effective fiscal policies for sectoral development.]]>
