Assessment Of Public Expenditure And Its Impact On Agricultural Growth In Ethiopia
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Date
2021-02
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Addis Ababa University
Abstract
This research deals with identifying those public expenditure factors affecting agricultural growth in Ethiopia. The study is based on a time series data of 38 years from 1980/81 to 2018/19. During this period, the country’s economy has experienced both upswing and downswing in its agricultural sector. Government expenditure in different sectors including agriculture and its allied activities, education, health and roads construction is expected to promote agricultural growth. Here ARDL approach to co integration and an error correction representation of the ARDL model have been used due to certain advantages. The result of the Bounds test indicates the presence of a long-run co integrating relationship between the variables in the study. The results reveal that in the long-run, the effect of public expenditure through recurrent expenditure, on agricultural growth is significantly negative, while expenditure on education and health to enhance agricultural growth are significantly positive on the short-run that is in line with several earlier studies. Public expenditure in capital and roads construction to enhance agricultural growth is significantly negative in the short-run however public expenditure on capital, education, health, and roads construction to enhance agricultural growth do not significantly affect agricultural growth in the long-run. The discoveries reveal that prudent utilization of government expenditure cans possibly accelerate agricultural development and improve its efficiency.
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Keywords
Non-agricultural public expenditure, Agricultural public expenditure, Agricultural growth, ARDL, Ethiopia