POLITICAL REGIME TYPE, LIBERALIZATION AND FISCAL DEFICITS IN DEVELOPING COUNTRIES: EVIDENCE FROM NIGERIA

Chronic and persistent incidence of public deficits has been one of the debated issues in the past four decades. Many analysts have attempted to associate the poor fiscal outcome with military rule, thereby wrongly exonerating the democratic regime of not accumulating deficits. This study examines the relationship between government-type and fiscal deficits in Nigeria using time series data for the periods 1970-2010. The study applied econometric technique of ordinary least square method (OLS) and found that government-type does matter for fiscal operations in Nigeria. Specifically, the study found that democratic regimes in Nigeria do accumulate fiscal deficits contrary to earlier expectation. In addition, the findings show that there was strong inclination for fiscal deficits to decrease with financial liberalization, while liberalization of foreign trade leads to the increase in fiscal deficits. It is recommended that government should sustain the financial sector reforms in Nigeria, encourage productive spending on infrastructure for economic growth and development under a democratic atmosphere. Appropriate mechanisms should be put in place for efficiency in public financial management. The principle of value for money should be imbibed in execution of public project to ensure accountability and transparency in the democratic government