PUBLIC EXPENDITURE AND ECONOMIC GROWTH IN WEST AFRICAN COUNTRIES: AN EMPIRICAL EXAMINATION
Ubong E. Effiong And Nora F. Inyang
Department of Economics
University of Uyo, Uyo
ubongeffiong78@yahoo.com ; nora_inyang@yahoo.com
ABSTRACT
This paper examined the effect of government expenditure on the economic growth of fifteen (15) West African countries. The paper employed the ordinary least squares (OLS) approach of estimation in examining the effect of government expenditure on the economic growth of each of the 15 countries. However, the fixed effects least squares dummy variable (LSDV) panel regression approach was used in determining the effect of government expenditure on the economic growth of West Africa in general. In examining the nature of the relationship between government expenditure and economic growth in the sub-region, the Granger Causality Staked test was utilized. Findings of the study revealed that government expenditure exerts a positive and significant effect on the economic growth of all the 15 West African countries. Also, the Panel regression result indicates that government expenditure positively and significantly affects economic growth. However, the magnitude of the significance varies from country to country as reported by the Wald test. The Stacked test indicated that a one-way causality runs from government expenditure to economic growth. The paper recommended that governments of West African countries should increase its spending on components of public expenditure which will in turn promote investment in the private sector. This, as captured in the Ram’s model, will propel growth in diverse sectors of the economy.
Keywords: Government Expenditure, Economic Growth, Panel Regression, OLS, LSDV
