SECTORAL IMPACT OF PUBLIC EXPENDITURES ON ECONOMIC GROWTH IN SELECTED WEST AFRICA COUNTRIES: 2000-2023
Abstract
Public expenditures are vital for growth, influencing income distribution, resource allocation, and national income composition. Significant segments of these expenditures include health, education, agriculture, and military. However, the sluggish economic growth rates in the region raises key questions on the efficacy of public expenditures in promoting economic growth. Thus, this study examined the sectoral impact of public expenditures on economic growth in 12 selected West African countries from 2000 to 2023. This study used panel regression techniques. Results revealed that there will be a 0.04% increase in growth for every percentage increase in health expenditures in the long-run. Similarly, a 1% increase in education expenditure would lead to a 0.14% increase in economic growth. Conversely, there will be an increase of 0.04% in economic growth in the case of a 1% increase in military expenditure as a share of GDP (percent). Furthermore, every 1% increase in agricultural expenditure will lead to a 0.18% increase in growth. This outcome aligns with the 2003 Malabo position that agricultural expenditure is expected to positively influence growth and validates the Keynesian proposition that government expenditure in the agricultural sector can stimulate economic growth. The estimated coefficient of inflation is negative and statistically significant. Additional results revealed that in the case of a 1% increase in foreign direct investment net inflows, there may be an increase of 0.09% in economic growth. Hence, this study recommends improving efficiency in health sector spending to reduce waste and corruption. This research also advocated for increased budgetary allocation to education, particularly at the primary and secondary levels, and expanded access to vocational and technical education to boost employability. Furthermore, this investigation recommended increasing transparency and accountability in defense budgets and prioritizing development-oriented expenditures over arms purchases. Additionally, this paper recommends prioritizing public investment in rural infrastructure (e.g., roads, storage, and irrigation), providing subsidies or low-interest credit to farmers to increase productivity, and supporting agricultural extension services and research to improve yield.
Keywords:
Fiscal Policy, Military Expenditure, Economic Growth, Policy Designs, Health Spending, Panel Data AnalysisDownloads
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Copyright (c) 2025 Ndidi Chinonyelum Christiana, Oniore Jonathan Ojarikre, Aigbedion Marvelous Isibor
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