Public Expenditure and Economic Growth in South Africa: Long Run and Causality Approach

Idenyi, Odo Stephen; Ogonna, Igberi Christiana; Chinyere, Udude Celina; Chibuzor, Chukwu Bishop

doi:10.9734/ajeba/2016/29677

Cited by 8 publications

(7 citation statements)

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“…revenue generated across emerging economies and to assess the possible input of each sector to economic growth as this will enhance allocative efficiency. Idenyi, Ogonna, Chinyere, and Chibuzor (2016) submit that for government expenditure to be able to promote growth and development in any economy, there is a need for the budgeting process to be significantly evaluated to ensure that resources are allocated based on social, human and infrastructural need in the economy.…”

mentioning

confidence: 99%

Revenue Profile and Government Expenditure in Nigeria

Joseph¹,

Festus²,

David³

2019

theijbm

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mentioning

confidence: 99%

Revenue Profile and Government Expenditure in Nigeria

Joseph¹,

Festus²,

David³

2019

theijbm

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“…The Keynesian school of thought therefore advocates for an active role of the government in the economy through public spending and money stock in an effort to stimulate aggregate demand and reduce unemployment levels. Idenyi, Ogonna, Chinyere and Chibuzor (2016) concurs, adding that in South Africa's quest to achieve better living standards, the government often centers spending towards the important macroeconomic objectives such as full employment, economic growth, poverty reduction and price stability. On the contrary Classical economics proposes that government intervention is redundant and if spending by government is increased it will not lead to an increase in national output.…”

Section: Main Theories Of Government Spendingmentioning

confidence: 99%

“…With a ratio of 20 percent in 2006, which subsequently fell to 19 percent between 2007 and 2008, the ratio picked up again to 21 percent during the recessionary period of 2009 (indicating the highest government expenditure between 1960 to 2011) (Odhiambo, 2015). The effects of government spending on GDP are still widely debated, with some arguing that government spending in South Africa has a positive effect on growth, while others argue otherwise (Mthethwa, 1998;Oladele et al, 2017;Idenyi, 2016). Nonetheless economic growth has been rather sluggish in the country for a while now.…”

Section: Government Spending Overview In South Africamentioning

confidence: 99%

Examining Factors That Drive Government Spending in South Africa

Mdluli¹,

Mncayi²,

Camel³

2019

Proceedings of the 52nd International Academic Conference, Barcelona

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The structure of budgets has changed drastically in the past three decades both globally and locally. Most economies have consistently had growing government spending, some spending way more than what they earn especially following the aftermath of the global financial crisis. Literature shows that government spending in high-income countries has been more on social protection, while public servants compensation has dominated spending in many low-income countries, especially in Africa. In South Africa, a weak investment climate, established years of slow economic progress, rising unemployment and poverty levels which have negatively affected the tax base and therefore revenue collection. The country has been spending more money than it earns, to an enormous degree raising worries to research the drivers of this growth in expenditure, subsequently the essential objective of this study was to pinpoint the key factors that have added to this situation. The study adopted a quantitative research approach through the use of quarterly time series data spanning from 1995 through to 2018. An autoregressive distributed lag (ARDL) model was utilized so as to determine the long-and short-run impacts of the chosen variables on government spending. The findings of the study show that government spending in South Africa, particularly after 1994 has been driven more by current spending than capital spending which presents significant economic effects in the long-run. Among the most significant factors, explicitly in the short run, incorporate unemployment levels, rising debt and inflation. Results further revealed that political instability, low economic growth as well as a growing public size and bailouts of unproductive state owned entities (SOEs) induced significant long term consequences on spending. The continued worsening of spending patterns suggests the presence of fundamental obstacles including the country's high unemployment levels, for both adults and youth, inferring that the revenue base keeps on narrowing, while the growing poverty levels forces spending towards current spending such as the growing social welfare needs rather than productive activities such as investment spending. The study recommends that the size of the public wage bill be reduced and many unproductive SOEs be privatized to relieve spending. Additionally, a multidimensional approach is needed which entails the reduction of debt accumulation to have low interest repayments, restructuring the labour market to improve outcomes, expanding the revenue base, creating an environment conducive to private spending and economic growth and promoting a stable and transparent political climate.

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“…In contrast, the expenditure share in South Africa exceeds the average share for OECD countries. This has been partially attributed to the need for social and infrastructure investments in the post-Apartheid period (Idenyi et al, 2016). Note: Compensation of employees consists of all payments in cash, as well as in kind (such as food and housing), to employees in return for services rendered, and government contributions to social insurance schemes such as social security and pensions that provide benefits to employees.…”

Section: Public Expenditures Have Generally Risenmentioning

confidence: 99%

The immigration landscape: Patterns, drivers and policies

2018

How Immigrants Contribute to Developing Countries' Economies

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Public Expenditure and Economic Growth in South Africa: Long Run and Causality Approach

Cited by 8 publications

References 0 publications

Revenue Profile and Government Expenditure in Nigeria

Revenue Profile and Government Expenditure in Nigeria

Examining Factors That Drive Government Spending in South Africa

The immigration landscape: Patterns, drivers and policies

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