Pdf effect of public spending on economic growth gideon. Public expenditure is one of the crucial tools of determining the speed of economic growth and development. In zambia the growth in public expenditure has become a topical issue in the light of escalating debt levels and widening budget deficit. Government expenditure and economic growth in the eu. Public expenditure restores a balance in the economy by focusing on those areas of production which generate maximum linkages effect. This paper presents a smallscale intertemporal model of endogenous growth that accounts for the composition of public expenditure and externalities associated with public capital. The study revisited the existing evidences of india pakistan and china with updated data on the effect of military expenditure on economic growth. The impact of government expenditure on economic growth. Public spending on education and economic growth in. They used disaggregated analysis in an attempt to unravel the impact of government expenditure on economic growth. The impact of government expenditure on economic growth in. The result showed that, education expenditure has a significant impact on gdp. The goals of planning are effectively realised only through government expenditure. The specific objectives of this study were to disaggregate recurrent public expenditure into.
Government expenditure and economic growth in nigeria. Therefore, the effect of public expenditures on economic growth may be a comprehensive indicator of public expenditure productivity. Effects of public expenditure on economy production. The specific objectives of the study were to investigate the impact of government expenditure on components. The research aims at analyzing impact of expenditure on economic growth in pakistan. The effect of public expenditure on the economic growth. Government expenditure and economic growth in the eu long. For instance, government expenditure can contribute to agricultural growth and the latter can indirectly, through creating rural non farm jobs and increased wages, generate economic growth. It is one of the inward foreign direct investment flow determinants. Impact of expenditure on economic growth in pakistan. Effect of public recurrent expenditure and economic growth in.
Pdf the impact of public expenditure on economic growth. Abstract the study investigated the effect of public expenditure on the growth and development of nigerian economy 19802012. This research will be country specific as it seeks to investigate the effect of government expenditure on economic growth in nigeria. The impact of government spending on economic growth. This study is guided by the neoclassic economic growth theory. The study examined the impact of government expenditure on economic growth in nigeria, using the time frame 20002015 5 years. The result showed that both capital expenditure and laggedtwo capital expenditure positively and significantly impacts gdp.
Three research hypotheses were formulated to guide the study. Effect of public recurrent expenditure and economic growth in nigeria 19862016 ezeugwu ikechukwu meletus and ukwuani patrecia department of banking and finance enugu state university of science and technology esut, enugu, nigeria. An analysis of the contribution of public expenditure to economic. Effects of public expenditure in an economy hubpages. The major objective of this study is to estimate the impact of economic growth on government expenditure using asymmetric ardl approach. Pdf the effect of public expenditure on economic growth. Public spending on education and economic growth in algeria. Growth effects of government expenditure and taxation in. Variables of the study are initially nonstationary at level they are converted in to stationary by taking first difference. Pdf the composition of public expenditure and economic growth. Wagners law the law of increasing expansion of public and particularly state activities wagner, 1893 is one of the earliest attempts that emphasises economic growth as the fundamental determinant of public sector growth. Empirical evidence we start the investigation with the following conjecture the impact of military expenditure on growth is a nonlinear function of.
The purpose of this study was to find out the impact of public expenditure composition on economic growth in kenya from 1964 to 2011. Economic growth is dependent variable whereas, total capital expenditure, total recurrent expenditure, agriculture, nonagriculture, industry, service and inflation are independent variables. The data were subjected to the instrumental variables twostage least squares regression. However, findings on the relationship between the level of public spending and economic growth in low to middleincome economies are mixed. Effects of public expenditure on economy production distribution. By trying to achieve economic growth and development, public expenditure creates wide effects on the improvements in infrastructural facilities, increasing of social overheads, maximum social advantage, welfare, safety, security. To examine whether the components of government spending stimulating or adversely affecting economic growth using econometric model. Nwadiubu and onuka 2015 however, agreed that rising government expenditure on transport and communication traco, and health hea results to an increase in economic growth. A complete list as well as pdf files are available at. Impact of educational expenditure on economic growth in. Abstract this study examined the effect of public recurrent expenditure on economic growth in. While the specific objectives of this study include. The major objective of the study is to examine the effect of different component of government expenditure in economic growth in context to nepal.
Empirical studies have been done using cointegration analysis and causality test to justify the relationship and causality of the. Pdf the composition of public expenditure and economic. Government expenditure and economic growth in the eu longrun. Jan 12, 2018 economic growth is dependent variable whereas, total capital expenditure, total recurrent expenditure, agriculture, nonagriculture, industry, service and inflation are independent variables. If the growth in the economy is greater than population growth, a gdp per capita increase, living standards will on the average normally reach higher levels eklund, 2000. To estimate the impact of expandingcontracting economic growth on government expenditure to determine the existence and direction of causality running. Secondary data were collected from central bank of nigeria cbn statistical bulletin. Accordingly,production level tends to raise the resources from unproductive activities to productive ones. The impact of productive and nonproductive government.
The composition of public expenditure and economic growth. Impact of government expenditure on economic growth in. Results of cointegration show that there is no any relationship in long run among growth and expenditure. The impact of government expenditure on economic growth in kenya. The impact of government spending on economic growth by daniel j.
The purpose of this study was to find out the effect of recurrent public expenditure on economic growth in kenya from 19802014. This study examines the longrun impact of government expenditure on economic growth in ghana from 1991 to 2015. The hypotheses thus investigated the influence of aggregate expenditure, capital expenditure and recurrent expenditure on economic growth and envelopment in. Public expenditure acts as a pumppriming,attracting idle resources to their productive utilization. Abstract this study examined the relationship between public expenditure and economic growth in nigeria. Policymakers are divided as to whether government expansion helps or hinders economic growth. Public expenditure on education in comparison to indias total government expenditure and gdp detailed data on public expenditure on education, in comparison to the totalexpenditure of the government. The other variables in the model serve as control variables. Government spending and economic growth in nigeria1980. Data source and variable description data have been collected on education expenditure and economic growth for 14 selected. Empirical investigation of subsaharan africa 63 though is an investigation of the effects of government spending and foreign official development on economic growth. Government spending is disaggregated into various components, including maintenance, security, and investment in education, health, and core infrastructure. In their paper, nurudeen and usman 2010 insisted on the fact that nigerias expenditures on. Economic growth, ols 1 introduction an inclusive and longterm economic growth has become a concern for many policymakers for decades and government spending has been debated whether it is able to accelerate economic growth.
The shortrun dynamics adjusts to the longrun equilibrium at the rate of 60% per annum. Public spending and economic growth in zambia an economic. Abu and abdullah 2010 investigates the relationship between government expenditure and economic growth in nigeria from the period ranging from 1970 to 2008. Consequently, main objective is to analyze whether government expenditure causes economic growth in asian countries vice versa and then scrutinizing longrun equilibrium relationship exists between them. More specifically, the study sought to assess government expenditure and economic growth. Effect of public recurrent expenditure and economic growth. By contrast, the relationship between the capital component of public expenditure and percapita growth is negative. Ideally, the two components of such an indicator should be measurable.
The private sector is either unable to find and invest these huge amounts or it is unwilling because the return from such investments may be uncertain or long delayed. Ordinary least square method of multiply regression analysis was used to analyze the data. Introduction the basic aim of the public sector as part of the macroeconomy is the provision of necessary government. Abstractmain purpose of this study is to identify the impact of government expenditure on economic growth in asian countries. Contribution of public expenditure and investment to gdp growth, 2005 to 2014. This study aimed at examining the relationship between public spending and economic growth and how the composition of government expenditure affects economic growth in kenya using time series data from 1980 to 2014. Public debt is one of the main macroeconomic indicators, which forms countries. This study examines the impact of public sector spending on economic growth in nigeria from 19812015. Jul 31, 2017 public expenditure is one of the crucial tools of determining the speed of economic growth and development.
Impact of educational expenditure on economic growth in major asian countries 177 generally, public sector always aims to maximize the welfare of the people by capturing positive externalities of expenditure on education. Effects of public expenditure on production, distribution. Public expenditure, recurrent expenditure, capital expenditure, economic growth and development. Adopting the autoregressive distributed lag ardl approach to cointegration, the results suggest that government investment expenditure. This paper analyses both the long and the shortrun relation between government expenditure and potential output in eu countries by means of pooled mean group estimation pesaran. Moreover, corruption may induce more government spending on military spending mauro, 1998 and hence the effect of economic growth on government spending is likely to be larger in a more corrupt country.
Econometric approaches analyzed the short and long run relationship between gdp growth and military expenditure. The impact of public expenditure components on economic. Dec 28, 2012 public expenditure on education in comparison to indias total government expenditure and gdp detailed data on public expenditure on education, in comparison to the totalexpenditure of the government. One set of studies has explored the principal causes of growth in the public sector. The major objective of this paper is to analyze the effect of public. The composition of public expenditure and economic growth article pdf available in journal of monetary economics 372. The effect of public expenditure on the growth and. Even though that the most important effect on economic growth is for education, the other three explanatory variables affect also, positively, the economic growth. That way public expenditure policy has become critical, and equally so, the sectoral distribution of these expenditures see onimode, 1995. Wagners law the law of increasing expansion of public and particularly state activities wagner, 1893 is one of the earliest attempts that emphasises economic growth as the fundamental determinant of. The effect of public debt on economic growth is a debatable issue between scholars since the onset of the debt crisis in 1980.
Over the three decades, government expenditure in the country grew at a faster rate than the growth rate of gdp. Analysing the data by looking at it in graphical form, throws upsome interesting points. D student of economics in igbinedion university okada, edo state, nigeria. The annual data were sourced from the cbn statistical bulletin. The effect of public expenditure on the economic growth study in nigeria, 1986 2016. In this paper, theoretical and empirical literature on the relationship between government expenditure and economic growth has been. Pdf he goal of this research was to investigate empirically how government expenditure contributes to economic growth in east africa. The policy implication is that that both the shortrun and longrun expenditure has significant effect on economic growth of nigeria. To empirically investigate the short run and long run relationship between the components of government expenditure and economic growth.