The Impact of Government Spending on Economic Growth: The Case of Ethiopia
| dc.contributor.advisor | Mulat, Teshome (Professor ) | |
| dc.contributor.author | Ketema, Teshome | |
| dc.date.accessioned | 2021-07-14T15:45:56Z | |
| dc.date.accessioned | 2023-11-04T10:29:42Z | |
| dc.date.available | 2021-07-14T15:45:56Z | |
| dc.date.available | 2023-11-04T10:29:42Z | |
| dc.date.issued | 2006-07 | |
| dc.description.abstract | The objective of this paper is to analyze the impact of government spending on economic growth in Ethiopia. Since the link between government spending and economic growth is complex, both analytical (qualitative) explanations and econometric analysis are used in the study. The descriptive and qualitative analysis of the study investigates that the limited revenue buoyancy, unreliable source of financing, imprudent fiscal policy (particularly in the dreg regime) and capacity deficiency have limited the role of government expenditure, as fiscal instrument, in stimulating economic growth. Although the rate of growth of expenditure as a ratio of CDP has been increasing consistently over time, its absolute per capita magnitude is too low, even compared to Sub-Saharan African countries. Thus, there is a need to increase government expenditure and to effectively and efficiently utilizing it in a way it induce faster economic growth. The need for increasing government expenditure is also evident in an effort towards achieving the Millennium Development Coals (MDGs). This calls for, in general, non destortionary and reliable source of revenue, capacity building, and restraining expenditure that can be efficiently provided by private sector. In the econometric analysis efficiently has been made to see the impact of various components of government spending (investment, consumption and human capital expenditures) on the growth of real CDP for the period 1960/61-2003/04 using Johansson Maximum Likelihood Estimation procedure. It is found that only expenditure on human capital have long-run significant positive impact. Investment (productive) government spending displays a negative but insignificant impact on growth of real CDP, which again reveals the inefficiency and poor quality nature of public investment. In the short run, all components of government expenditure do not have significant meaning in explaining economic growth. | en_US |
| dc.identifier.uri | http://etd.aau.edu.et/handle/123456789/27184 | |
| dc.language.iso | en | en_US |
| dc.publisher | A.A.U | en_US |
| dc.subject | Government Spending | en_US |
| dc.title | The Impact of Government Spending on Economic Growth: The Case of Ethiopia | en_US |
| dc.type | Thesis | en_US |