The impact of public spending on economic growth in Kenya: an empirical study

Abstract

The aim of this paper is to investigate the impact of public spending on economic growth in Kenya by analyzing time series data from Kenya for the period 1970-2007 so as to add to existing literature and help guide policy. This paper is based on the endogeneous growth model of Barro's (1990), in which public expenditure is categorized as productive or unproductive.

The study results show that of the three categories of government expenditure investment in human capital had the most significant and positive impact on growth while as recurrent expenditure had an insignificant impact on growth. Surprisingly, the impact of public investment on economic growth for the period under review was significantly negative which contradict the expected results based on economic theory.