Abstract
The paper sought to investigate the effect government expenditure on economic growth in Sub-Saharan Africa using a panel data for 35 Sub-Saharan African countries for the period 2006-2018. The paper adopted dynamic panel data and estimates were achieved by using two-step system GMM while taking into account the problem of instrument proliferation. The paper provided evidence that education and health expenditure are key determinants of income growth for SSA. The impact of education spending on cross-country income variation is more effective in low income SSA countries than the middle income SSA countries. However, military expenditure on output growth is more effective in improving income level of middle income SSA countries than low income SSA countries. SSA countries should allocate more funding towards education sector and should also avail compulsory and free primary and secondary education. SSA should carry out health reforms which improve primary health and universal health insurance coverage.
Highlights
A number of scholars have explored the nexus between government expenditure and economic growth (Devarajan et al, 2013; Barro, 1990; Kimaro et al, 2017), and among many other researchers
The descriptive statistics further shows that mean domestic saving was highest in middle income economies of Sub-Saharan African (SSA) (17.69 percent), low income level economies of SSA had a mean of 2.43 percent and pooled mean for SSA countries was 8.43 percent
The study sought to analyse the effect of government expenditure on economic growth in Sub-Saharan Africa
Summary
A number of scholars have explored the nexus between government expenditure and economic growth (Devarajan et al, 2013; Barro, 1990; Kimaro et al, 2017), and among many other researchers. SSA has experienced dwindling economic performance despite the increase in public expenditure. The increase in government expenditure in SSA resulted from many SSA countries adopting policy reform programs in response to the growing current account imbalances and poor economic performance (Sahn, 1992). A country like Botswana registered an average total expenditures growth of about 7 percent annually since the beginning of the year 2000 compared to Asia’s giants (China and India) while Cote d’Ivoire, Togo, and Zimbabwe have slumped in growth (Fan & Saurkar, 2008)
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