Effect of Public Expenditure on Economic Growth in the Case of Ethiopia

Abstract

This study’s primary goal was to explain how Ethiopia’s economic growth affected government spending. The time series data utilized in the study were gathered between 1980 and 2018. The time series data were subjected to the Johansen cointegration test and the vector error correction model (VECM) in order to evaluate the short- and long-term correlations between public spending and economic growth in Ethiopia. According to the study, both long- and short-term economic growths are positively and significantly impacted by government spending on education. Long-term economic growth is negatively impacted by government expenditure on agriculture, while short-term effects are negatively impacted and considerable. In the long run, investment spending has a positive but negligible impact on economic growth; however, in the short run, it has a negative but large effect. Defense spending by the government has a positive and negligible effect on economic growth over the short and long terms. Both in the short and long terms, spending on health has a favorable and considerable impact on economic growth. According to the study, government spending on the education sector would help to foster the conditions that could result in higher labor force participation rates and, consequently, higher rates of economic growth. Aiming to establish a healthy and productive society that promotes economic progress, policy should focus on complementary measures to scale-up initiatives in the health sector.

Government sectoral spending and human development in Nigeria: Is there a link?

“…Our belief in using HDI, which is based on Sen's capabilities approach, stems from our conviction that the traditional one-dimensional measure of socioeconomic well-being is unreliable and misleading [ 6 , 7 ]. Furthermore, our motivation is fueled by the fact that the majority of studies on the relationship between government spending and economic growth are sector-specific [ [18] , [19] , [20] , [21] ]. The current study departs from the aforementioned in that it is disaggregated into a multi-sector approach such as government spending on administrative services, economic services, social and community services as well as transfers.…”

Untitled

“…G.M. Emeru (2023) explains, based on data from 1980 to 2018, how different types of public spending have affected economic growth and proves that public spending on the education sector creates conditions that will help to achieve a higher to develop scientific approaches to the distribution of educational resources, improve the level of management of educational resources, and expand the scope of technological and innovative education. Education financing is a critically important issue for ensuring the functioning of the country's education system.…”

Türki̇ye’de Merkezi̇ Yöneti̇m Bütçesi̇nden Yapilan Eği̇ti̇m Harcamalarinin Ekonomi̇k Büyüme Üzeri̇ndeki̇ Etki̇si̇

“…Demirgil ve Sonkur (2022), Türkiye'de 1990-2020 döneminde kamu eğitim harcamaları ile ekonomik büyüme arasında uzun dönemli ilişki tespit ederek, kamu eğitim harcamalarının ekonomik büyümeyi pozitif yönde etkilediği sonucuna ulaşmışlardır. Chadra (2011), Hindistan'da 1951-2009 döneminde kamu eğitim harcamaları ve ekonomik büyüme arasında doğrusal ve doğrusal olmayan nedensellik analizleri sonucunda çift yönlü nedensellik ilişkisi olduğunu belirlemiştir Emeru (2023),. araştırmasına göre Etiyopya'da 1980-2018 döneminde hem uzun hem de kısa dönemde ekonomik büyüme hükümetin eğitime yaptığı harcamalardan olumlu etkilenmektedir.İkinci olarak eğitim harcamaları ile ekonomik büyüme arasında negatif bir ilişkinin olduğunu veya hiçbir ilişkinin olmadığını belirleyen çalışmalardan oluşmaktadır.…”