The Relationship Between Government Expenditure and Economic Growth Evidenced From Four Eastern African Countries
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Keywords:GDP, expenditure, economic growth, GDP per capital, regression
The study assesses the relationship between government expenditure and economic growth in Ethiopia, Kenya, Tanzania, and Rwanda with the objective of comparing their economic growth. Panel (time-series cross-section) data over the period of 2011 to 2020 was used for the analysis. A descriptive analysis was carried out with the aim of providing an overview of the economic growth by comparing the nations, and a linear regression model was undertaken between the economic growth and the government expenditures of the respective countries. The result revealed that the four countries' economies grew at a fluctuating rate over the study period. Ethiopia had a substantially larger GDP than the other countries Kenya’s even though it had the lowest GDP per capital in the group, while Kenya had a much higher GDP per capital Compared to other nations. Kenya’s GDP per capita was double of Ethiopia’s and Tanzania’s at the end of the study period. Based on the regression analysis results, there is a positive but insignificant relationship between government expenditure and economic growth in the four countries. Governments of developing nations should use scarce resources effectively and efficiently to improve the living standards of their citizens. Research in this area plays a vital role in improving government resource management.
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