Effect of Various Categories of Government Expenditure on Economic Growth in Kenya
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Date
2021
Authors
Kimani, Grace Wambui
Maingi, James
Journal Title
Journal ISSN
Volume Title
Publisher
IJCAB
Abstract
In Kenya, government expenditure has been changing tremendously in its composition and size.
Noticeably, since Kenya’s independence, government expenditure has witnessed great expansion.
However, the country has not achieved consistent economic growth for a long duration of time.
Despite the increase in allocation of resources through increasing public spending, economic
growth has not grown at the same rate. As such, economic growth did not consummate with the
increase in allocation of resources through government expenditure. The study sought to
determine the effect of education expenditure, defense expenditure, health expenditure and
infrastructure expenditure on economic growth. It used an explanatory research design and
secondary time-series data for the period between 1985 and 2018. Data on education expenditure,
defense expenditure, health expenditure as well as infrastructure expenditure and economic
growth was acquired from Kenya National Bureau of Statistics. The quantitative data was
collected, edited and coded into Statistical software known as STATA version 14. Analysis of the
quantitative data was based on descriptive as well as inferential statistics. Correlation analysis
was employed to assess the strength of correlation between independent and dependent variables
whereas regression analysis determined the weight of association between independent and
dependent variables. Diagnostic test was performed to test for the regression model assumptions
before carrying out regression analysis. The research focused on autocorrelation test, stationarity
test, autocorrelation test, normality as well as heteroscedasticity test. The study revealed that
education expenditure had a positive effect on economic growth in Kenya. The study found that
defense expenditure had a positive effect on economic growth in Kenya. The results revealed that
health expenditure had a positive effect on economic growth in Kenya. In addition, the study found
that infrastructure expenditure had a positive effect on economic growth. The study concludes that
government expenditure has a significant effect on economic growth in Kenya. The study policy
implication of the study is that Kenyan government as well as policy makers should formulate
policies and guidelines geared towards increasing education expenditure. This will help in
ensuring adequacy in a trained, qualified and productive labor that is important in ensuring an
improvement in economic growth. In addition, the government of Kenya should allocate at least
15 percent of their total expenditure to the healthcare so as to ensure a productive and healthy
workforce. The government also needs to increase infrastructure funding as recommended by the
World Bank to between 7 and 9 percent.
Description
Article
Keywords
Government Expenditure, Economic Growth
Citation
Kimani, G. W., & Maingi, J. (2021). Effect of Various Categories of Government Expenditure on Economic Growth in Kenya. International Journal of Current Aspects in Finance, Banking and Accounting, 3(1), 21-40.