| dc.description.abstract | Faced with severe macroeconomic imbalances in the past, Kenya has been forced to cut down aggregate spending and deficits. Due to tightening budget constraints non growthenhancing expenditures may crowd out outlays that possibly boost economic growth. As
such, the purpose of this study was to find out public expenditure composition and economic growth in Kenya from 1972 to 2009. The specific objectives of the study were to investigate the relationship between expenditure on education and economic growth, to find out the effect of defense expenditure by the government on economic growth , to investigate the effect of government expenditure on health on the economic growth , to investigate the effect of government expenditure on agriculture on the economic growth and to find out the effect of government expenditure on transport and communication infrastructure on economic growth in Kenya.
The growth models specified in this study only takes into account potential determinants of growth in Kenya. The key explanatory variable in the model is growth per capita. This is the increase of per capita GDP or other measure of aggregate income. This study employed use of annual Kenyan data for the period 1972 to 2009 for all the variables. Augmented Dickey -Fuller (ADF) tests were used to test for stationarity of the time series. The study conducted Stationarity Test, Causality Test, Cointegration Test and build an Error Correction Model in that order for estimation procedures.
The total expenditure on transport and communication infrastructure was statistically significant. The coefficient of this variable is positive suggesting that one unit increase in expenditure on transport and communication infrastructure yields 0.46 unit increases in Kenya's economic growth. The study concludes that average government expenditure and potential output are linked by a long-run relation such that government spending grows almost in proportion with potential output. The study recommends adoption of policies that lead to the, creation of diversified, dynamic, and competitive, sectors. capable of. absorbing the more educated labor force to: translate human capital into higher Economic growth. | en_US |
