Socio-Economic Relationships Between Fiscal Instruments and Economics of Growth in Developing Economies: A Review Of Literature

Abstract

The goal of this study is to review literature on socio-economic relationships between fiscal policy, fiscal instability and economic
growth and their implications on developing countries like Nigeria. The impact of fiscal policy instruments on growth has become an
important issue for developing and transition economies. International donor and multi-lateral agencies such as World Bank, IMF,
USAID etc have developed interest on the causal relationships between the foregoing macroeconomic variables and are advising
developing and transitional economies to evolve a policy model including fiscal decentralization for growth enhancement. Nigeria,
being an oil based and monolithic economy is vulnerable to external trade shocks and the use of fiscal policy instruments and increase
in government spending to stimulate growth are indispensable actions. More so, the outbreak of the Wuhan-China Covid’19 pandemic
has negatively altered the economies of the world and novel remedies are required to revive ailing economies out of economic
recession. Based on the indisputable significance of fiscal responsibility, stability and growth to developing economies, the study is not
only necessary but timely. The review is therefore divided into (i) introduction (ii) empirical review (iii) conclusion and (iv)
recommendations.