SOURCE:

Faculty: Management Sciences
Department: Banking And Finance

CONTRIBUTORS:

Okeke, I. C.
Ibenta, S. N.O.
Okonkwo, V. I.

ABSTRACT:

The study examined the relationship between government expenditure and economic growth in selected African economies- Egypt, Kenya, Nigeria and South Africa for the period 1995-2016. Government expenditure is an important factor that determines the economic growth of nations. The level of economic growth in African nations has not been progressive despite the considerable scope of government expenditure, over the years. The specific objectives of the study were to determine the relationship between government expenditure on education, health, defence, infrastructure and economic growth using gross domestic product (GDP) real growth rate as dependent variable and government expenditure on education, health, defence, infrastructure as independent variables .The study was anchored on Keynesian theory. The study used secondary data obtained from World Bank data base, UNESCO statistical book and the Central Banks publication of respective selected countries. The data were subjected to ADF stationarity test, Johansen co-integration test , Auto regressive distributed lag (ARDL) and Granger causality test analysis over the period 1995 – 2016. The findings of the study showed that there is negative and insignificant relationship between total Government expenditure on education and economic growth in the selected emerging African economies;a positive and significant relationship between total Government expenditure on Health and economic growth in the selected emerging African economies, a positive and significant relationship between total government expenditure on Defence and economic growth in the selected emerging African economies and a negative and insignificant relationship between government expenditure on Infrastructure and economic growth in the selected emerging African economies. The study indicated that Government expenditure on education, defence and infrastructure did not granger cause economic growth in the selected emerging African economies. However government expenditure on health granger caused economic growth of the selected African economies. The study recommended among others that allocation of government spending should be based on the needs assessment and the productivity of individual sectors of economies in African countries .