The connection between government expenditure and economic growth: Case study of four Eastern African countries

Abstract

The governments today are concerned not only with performing basic responsibilities but also with promoting the economic development of their respective countries. The aim of the study was to examine the connection between government expenditure and economic growth in Ethiopia, Kenya, Tanzania, and Rwanda to provide information for policymakers on fiscal policy issues. Panel (time-series cross-section) data over the period of 2011 to 2020 was used. A linear regression model was employed, and a descriptive analysis was carried out. The findings of the study revealed that the four countries’ economies grew at a fluctuating rate over the study period. Ethiopia had a substantially larger GDP and the lowest GDP per capita, while Kenya had the lowest GDP and the highest GDP per capita among the nations. Kenya’s GDP per capita was double that of Ethiopia’s and Tanzania’s at the end of the study period. In addition, the results of the regression mode show a positive but insignificant connection between government expenditure and economic growth in the four countries.