Effect of Recurring Expenditure Financed by External Grants on Promoting Sustainable Economic Development of Sub-Saharan Africa Countries

Abstract

This study examined the effect of recurring expenditure financed by external grants on sustainable economic development of sub - Saharan Africa Countries. This paper asked the participation of external grants on the recurring expenditure as one of the source of funds, separately from international finance perspective; the mechanism of domestic did not talk about. This paper filled this gap in literature by determining the recurring expenditure financed by external grants. The study adopted a time series research design where by secondary data were used. The population of the study was external grants and Gross Domestic Product (GDP) from 1988/89 - 2019/20 financial years (Annual Data). The sample size of the research was 32 observations. Purposive sampling was used to choose the Tanzania as a study area of the research; data were collected from the Organization for Economic Co-operation and Development (OECD).The parameters tests such as test for co integration and unit root test was used to investigate co-integrating vectors. After that, Autoregressive Distributive Lag Model (ARDL) was carrying out to find the results. The finding shows that, recurring expenditure financed by external grants influence sustainable economic development; with P- Value of 0.002. At the same time as inflation rate looks to be insignificant with P- Value of 0.719. The study recommends in order encouraging sustainable economic development, government must proceed to promote the relationship with nations by giving development programs which are consistent with supporting programs. additionally, the research predict the requirement for introducing strong policies that will assist and promote strong collaboration with donor nations and spend more in substantial speculation and utilization expenditure in order to increase the level of production as which will affect the sustainable economic development.