Nyagwachi, Abel Otwori2025-02-212025-02-212013-10https://ir-library.ku.ac.ke/handle/123456789/29624A Research Project Submitted to the School of Economics in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Economics of Kenyatta University October, 2013 Supervisor: 1.George KosimbeiThe rapid growth of both sectoral government recurrent and development expenditure in Kenya as well as the slow growth of wage employment levels has raised concerns among policy makers on the effects of these growth levels on sectoral economic growth. The agriculture and forestry sector is one of the most important sectors for the Kenyan economy contributing 24% of national GDP in 2011. M’amanja and Morrissey (2005) found that human capital development which is achieved through investment in the education and health sectors was the most important determinant of overall GDP growth in Kenya. According to Barro (1990) the public administration and defense sector plays a critical role in encouraging private sector investment, savings and economic growth through enhanced property rights. Although the whole economy has experienced positive growth in most years since 1972, the above sectors have all experienced negative growth in some years between 1972 and 2011. The specific objectives of this study were to determine the effects of sectoral government development and recurrent expenditures as well as public and non-public wage employment on the economic growth of the above four sectors. The study used Panel Least Squares method for the period 1972-2011 and found that development expenditure, public sector and non-public sector wage employment have a positive effect on sectoral growth while recurrent expenditure had a negative effect on sectoral growth. Therefore, the government needs to reduce wasteful recurrent expenditure in the above four sectors and increase expenditure on priority development projects as well as pursue employment creation policies to ensure sustained growth in these four important sectors.enThesis