Infrastructure Deficit and its Impact on Regional Development: Evidence from the South-East Geopolitical Zone of Nigeria

Abstract

Persistent infrastructure deficits remain one of the most cited constraints on sub-national economic performance in Nigeria, yet most empirical work treats the country as a single unit and overlooks how deficits operate differently within a relatively homogeneous geopolitical zone. This paper examines the impact of infrastructure deficit on regional development in the South-East geopolitical zone of Nigeria, comprising Abia, Anambra, Ebonyi, Enugu, and Imo States, over the period 2000-2023. Regional development is proxied by real per-capita Gross State Product (GSPC), while infrastructure deficit is captured through a composite index built from electricity supply, paved road density, and tele-density indicators, alongside public capital expenditure on infrastructure as a financing variable. The study adopts an ex post facto research design using annual panel data sourced from the National Bureau of Statistics, the Central Bank of Nigeria Statistical Bulletin, and state Bureaus of Statistics. Given the panel structure of five cross-sectional units observed over twenty-four years, the study employs the Panel Autoregressive Distributed Lag (Panel ARDL) approach within a Pooled Mean Group (PMG) estimation framework, which accommodates mixed orders of integration and distinguishes short-run from long-run dynamics while permitting heterogeneous short-run adjustment across states. Pre-estimation diagnostics include panel unit root tests (Levin-Lin-Chu and Im-Pesaran-Shin) and the Pedroni and Kao panel cointegration tests. Findings indicate that infrastructure deficit exerts a statistically significant negative effect on regional development in both the short run and the long run, with the long-run elasticity exceeding the short-run coefficient, consistent with cumulative infrastructure neglect compounding over time. Electricity supply deficit emerges as the most economically damaging component, followed by road infrastructure deficit, while public capital expenditure on infrastructure shows a positive but comparatively modest effect, reflecting weak capital execution rates. The error correction term is negative, less than unity in absolute value, and statistically significant, confirming a stable long-run equilibrium relationship. The paper recommends a re-prioritisation of public capital spending toward power and road infrastructure within the South-East, alongside institutional reforms to improve capital budget execution.