<abstract xmlns="http://www.w3.org/1999/xhtml">

<bold>Aim/purpose</bold> – This study examined the impact of public sector spending and governance on economic growth in Sub-Saharan Africa (SSA) and further assessed the role of governance in the causal relationship between public sector spending and economic growth in the sub-region.
<bold>Design/methodology/approach</bold> – The study employed the Panel Corrected Standard Errors (PCSE) estimator on data spanning the period 2002 to 2020 across a sample of 31 selected countries in SSA. To check for the robustness of the results, we adopted the Dumitrescu and Hurlin (2012) panel non-causality test to detect Granger causality in the relationships among the variables.
<bold>Findings</bold> – The findings show that spending in the public sectors alone, such as education and health, does not always yield the needed outcome of promoting economic growth. Government education expenditure stimulates economic growth in SSA, albeit the effect is statistically insignificant, whereas government health expenditure has a growth-limiting effect in SSA. The results reveal that government effectiveness, rule of law, political stability, and absence of violence/terrorism are among the governance indicators that can help to fast-track economic prosperity in SSA. However, the results further show that good governance can act as a stimulant to invigorate the effectiveness of public sector spending in achieving economic growth in SSA. The growth-enhancing complementary role of good governance to public sector spending is robust across all governance indicators except political stability for government education spending and regulatory quality for government health spending.
<bold>Research implications/limitations</bold> – The findings imply that strengthening good governance in SSA is non-negotiable in managing and using public funds allocated to the public sectors and in achieving sustainable economic growth, poverty alleviation, and income inequality reduction in the sub-region. However, the findings of this study are limited to the SSA region and may not apply to other regions of the globe.
<bold>Originality/value/contribution</bold> – The contribution of this paper is that it examines the moderation effect of governance in the causal relationship between public spending and economic growth in SSA while accounting for cross-sectional dependence. The paper also contributes to the existing literature by using disaggregated governance and public sector spending components to ascertain the robustness of the results and better inform policy.
</abstract>

Aim/purpose – This study examined the impact of public sector spending and governance on economic growth in Sub-Saharan Africa (SSA) and further assessed the role of governance in the causal relationship between public sector spending and economic growth in the sub-region.
Design/methodology/approach – The study employed the Panel Corrected Standard Errors (PCSE) estimator on data spanning the period 2002 to 2020 across a sample of 31 selected countries in SSA. To check for the robustness of the results, we adopted the Dumitrescu and Hurlin (2012) panel non-causality test to detect Granger causality in the relationships among the variables.
Findings – The findings show that spending in the public sectors alone, such as education and health, does not always yield the needed outcome of promoting economic growth. Government education expenditure stimulates economic growth in SSA, albeit the effect is statistically insignificant, whereas government health expenditure has a growth-limiting effect in SSA. The results reveal that government effectiveness, rule of law, political stability, and absence of violence/terrorism are among the governance indicators that can help to fast-track economic prosperity in SSA. However, the results further show that good governance can act as a stimulant to invigorate the effectiveness of public sector spending in achieving economic growth in SSA. The growth-enhancing complementary role of good governance to public sector spending is robust across all governance indicators except political stability for government education spending and regulatory quality for government health spending.
Research implications/limitations – The findings imply that strengthening good governance in SSA is non-negotiable in managing and using public funds allocated to the public sectors and in achieving sustainable economic growth, poverty alleviation, and income inequality reduction in the sub-region. However, the findings of this study are limited to the SSA region and may not apply to other regions of the globe.
Originality/value/contribution – The contribution of this paper is that it examines the moderation effect of governance in the causal relationship between public spending and economic growth in SSA while accounting for cross-sectional dependence. The paper also contributes to the existing literature by using disaggregated governance and public sector spending components to ascertain the robustness of the results and better inform policy.

Public sector spending, governance, and economic growth in Sub-Saharan Africa

Department of Economics, Faculty of Economics and Management Sciences

Journal of Economics and Management

This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International License.

{"article-title":"Public sector spending, governance, and economic growth in Sub-Saharan Africa"}

Aim/purpose – This study examined the impact of public sector spending and governance on economic growth in Sub-Saharan Africa (SSA) and further assessed the...

Public sector spending, governance, and economic growth in Sub-Saharan Africa

Online veröffentlicht: 16. Juni 2023

Seitenbereich: 147 - 181

Eingereicht: 22. Nov. 2022

Akzeptiert: 15. Mai 2023

DOI: https://doi.org/10.22367/jem.2023.45.08

Schlüsselwörter
education expenditure, economic growth, governance, health expenditure, panel-corrected standard errors estimation, public sector spending

© 2023 Sulemana Mumuni et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International License.

Public sector spending, governance, and economic growth in Sub-Saharan Africa

Online veröffentlicht: 16. Juni 2023

Seitenbereich: 147 - 181

Eingereicht: 22. Nov. 2022

Akzeptiert: 15. Mai 2023

DOI: https://doi.org/10.22367/jem.2023.45.08

Schlüsselwörtereducation expenditure, economic growth, governance, health expenditure, panel-corrected standard errors estimation, public sector spending

© 2023 Sulemana Mumuni et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International License.

Schlüsselwörter
education expenditure, economic growth, governance, health expenditure, panel-corrected standard errors estimation, public sector spending