Impact of Government Spending In Social Sectors on Economic Growth: A Case Study of West African Economic and Monetary Union Countries

Ayira KOREM

doi:10.18535/ijsrm/v9i12.em7

Abstract

This study aims to investigate the short-run and long-run effects of government’s social expenditure proxies, namely education, and health spending on economic growth during the period 1985 - 2019 in West African Economic and Monetary Union. Using Auto Regressive Distributed Lag model (ARDL) based on panel data, the results of the study reveal that in short-run, government spending in social sectors has no significant impact on economic growth but in long-run the effects of education and health expenditures on the economic growth are significantly positive.

Keywords

Social expenditureeconomic growthAuto Regressive Distributed Lag modelWAEMU

References

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Alam, S., A. Sultana, and M. Butt (2010). “Does Social Expenditures Promote Economic Growth? A Multivariate Panel Cointegration Analysis for Asian Countries,” European Journal of Social Sciences 14 (1), p 44-54.Google Scholar ↗
Alper F. O. and M. Demiral (2016), “Public Social Expenditures and Economic Growth: Evidence from Selected OECD Countries”, Research in World Economy, Vol 7, No 2, p 44 – 51.Google Scholar ↗
Arjona, R., Ladaique, M., & Pearson, M. (2002), “Social protection and growth”, OECD Economic Studies, 35(2), p 7-45.Google Scholar ↗
Asghar N., P. Azim and H. Rehman (2011), “Impact of Government Spending in Social Sectors on Economic Growth: A Case Study of Pakistan”, Journal of Business and Economics, Vol 3, No 2, p 214-234.Google Scholar ↗
Barro, R.J. (2013); “Education and economic growth”, Annals of Economics and Finance,14(2), p 301- 328.Google Scholar ↗
Barro, R.J. (2013), “Health and economic growth”. Annals of Economics and Finance, 14(2), p 329-366.Google Scholar ↗
Barro, R. J. (1990), “Government Spending in a Simple Model of Economic Growth”. Journal of Political Economy, 98(5), p 103-126.Google Scholar ↗
Barro, R.J. (1991), “Economic growth in a cross section of countries”, The Quarterly Journal of Economics, 106(2), p 407-443.Google Scholar ↗
Beraldo, S., Montolio, D., & Turati, G. (2009), “Healthy, educated and wealthy: A primer on the impact of public and private welfare expenditures on economic growth”, The Journal of Socio-Economics, 38(1), p 946-956.Google Scholar ↗
Carter, J., Craigwell, R., & Lowe, S. (2013), “Government expenditure and economic growth in a small open economy: A disaggregated approach”, CBB Working Papers, WP/13/15.Google Scholar ↗
Devarajan, S., Swaroop, V., & Zou, H. (1996), “The composition of public expenditure and economic growth”, Journal of Monetary Economics, 37(2), p 313-344Google Scholar ↗
Dreger, C., & Reimers, H.E. (2005), “Health care expenditures in OECD countries: A panel unit root and cointegration analysis”, IZA Discussion Papers, 1469, p 1-20Google Scholar ↗
Eggoh J., H. Houeninvo and G.A. Sossou (2015), “Education, Health and economic growth in African countries”, Journal of economic development, Vol 40, Number 1.Google Scholar ↗
Folster, S., & Henrekson, M. (2001), “Growth effects of government expenditure and taxation in rich countries”, European Economic Review, 45(8), p 1501-1520Google Scholar ↗
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Lindert, P. (2004), “Growing Public: Social Spending and Economic Growth since the Eighteenth Century”. Vol 1-2. New York: Cambridge PressGoogle Scholar ↗
Lucas, R.E. (1988), “On the mechanics of economic development”, Journal of Monetary Economics, 22(1), p 3-42.Google Scholar ↗
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Piabuo S. M. and J. C. Tieguhong (2017), “Health expenditure and economic growth - a review of the literature and an analysis between the economic community for central African states (CEMAC) and selected African countries”, Health Economics Review, vol 7, No 23, p 1-13Google Scholar ↗
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Pyo, H.K. (1995), “A time-series test of the endogenous growth model with human capital”, Retrieved from, working paper 8851.Google Scholar ↗
Rebelo, S.T. (1991), “Long-run policy analysis and long-run growth”, Journal of Political Economy, vol 99, No 3, p 500-521Google Scholar ↗
Romer, P.M. (1986), “Increasing returns and long run growth”, Journal of Political Economy, vol 94, No 5, p 1002-1037Google Scholar ↗
Stokey, N.L. (1991), “Human capital, product quality and growth”, Quarterly Journal of Economics, vol 106, No 2, p 587-616Google Scholar ↗

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[refR-2] Alam, S., A. Sultana, and M. Butt (2010). “Does Social Expenditures Promote Economic Growth? A Multivariate Panel Cointegration Analysis for Asian Countries,” European Journal of Social Sciences 14 (1), p 44-54.Google Scholar ↗

[refR-3] Alper F. O. and M. Demiral (2016), “Public Social Expenditures and Economic Growth: Evidence from Selected OECD Countries”, Research in World Economy, Vol 7, No 2, p 44 – 51.Google Scholar ↗

[refR-4] Arjona, R., Ladaique, M., & Pearson, M. (2002), “Social protection and growth”, OECD Economic Studies, 35(2), p 7-45.Google Scholar ↗

[refR-5] Asghar N., P. Azim and H. Rehman (2011), “Impact of Government Spending in Social Sectors on Economic Growth: A Case Study of Pakistan”, Journal of Business and Economics, Vol 3, No 2, p 214-234.Google Scholar ↗

[refR-6] Barro, R.J. (2013); “Education and economic growth”, Annals of Economics and Finance,14(2), p 301- 328.Google Scholar ↗

[refR-7] Barro, R.J. (2013), “Health and economic growth”. Annals of Economics and Finance, 14(2), p 329-366.Google Scholar ↗

[refR-8] Barro, R. J. (1990), “Government Spending in a Simple Model of Economic Growth”. Journal of Political Economy, 98(5), p 103-126.Google Scholar ↗

[refR-9] Barro, R.J. (1991), “Economic growth in a cross section of countries”, The Quarterly Journal of Economics, 106(2), p 407-443.Google Scholar ↗

[refR-10] Beraldo, S., Montolio, D., & Turati, G. (2009), “Healthy, educated and wealthy: A primer on the impact of public and private welfare expenditures on economic growth”, The Journal of Socio-Economics, 38(1), p 946-956.Google Scholar ↗

[refR-11] Carter, J., Craigwell, R., & Lowe, S. (2013), “Government expenditure and economic growth in a small open economy: A disaggregated approach”, CBB Working Papers, WP/13/15.Google Scholar ↗

[refR-12] Devarajan, S., Swaroop, V., & Zou, H. (1996), “The composition of public expenditure and economic growth”, Journal of Monetary Economics, 37(2), p 313-344Google Scholar ↗

[refR-13] Dreger, C., & Reimers, H.E. (2005), “Health care expenditures in OECD countries: A panel unit root and cointegration analysis”, IZA Discussion Papers, 1469, p 1-20Google Scholar ↗

[refR-14] Eggoh J., H. Houeninvo and G.A. Sossou (2015), “Education, Health and economic growth in African countries”, Journal of economic development, Vol 40, Number 1.Google Scholar ↗

[refR-15] Folster, S., & Henrekson, M. (2001), “Growth effects of government expenditure and taxation in rich countries”, European Economic Review, 45(8), p 1501-1520Google Scholar ↗

[refR-16] Heitzig C. (2015), “U.S. State Social Spending and Economic Growth”, Honors Theses, College of Saint Benedict and Saint John’s University.Google Scholar ↗

[refR-17] Jerono, C.R. (2009), “Government Expenditure Components on Economic Growth in Kenya”, International Journal of Business and Social Science,’ Vol. 4, No. 4, p. 256-279.Google Scholar ↗

[refR-18] Khan, H., & Bashar, O. (2015), “Social expenditure and economic growth: evidence from Australia and New Zealand using cointegration and causality tests”, The Journal of Developing Areas, 49(4), p 285-300Google Scholar ↗

[refR-19] Kelly, T. (1997), “Public expenditures and growth”, The Journal of Development Studies, 34(1), p 60-84Google Scholar ↗

[refR-20] Lindert, P. (2004), “Growing Public: Social Spending and Economic Growth since the Eighteenth Century”. Vol 1-2. New York: Cambridge PressGoogle Scholar ↗

[refR-21] Lucas, R.E. (1988), “On the mechanics of economic development”, Journal of Monetary Economics, 22(1), p 3-42.Google Scholar ↗

[refR-22] Lustig, N. (2006), “Investing in health for economic development: The case of Mexico”. UNU-WIDER Research Papers, 2006/30Google Scholar ↗

[refR-23] Muller P. (2005), « Esquisse d’une théorie du changement dans l’action publique : structures, acteurs et cadre cognitifs », Revue française de science politique, Vol 55, No 1, p 155-187. Presse de Sciences Po.Google Scholar ↗

[refR-24] Nubukpo K. (2007), “Dépenses publiques et croissance des pays de l’Union économique et monétaire oust-africaine (UEMOA)”, Afrique contemporaine, vol 2, No 222, p 223-250.Google Scholar ↗

[refR-25] Pereira A. M.and J. M. Andraz (2014), “On the Long-Term Macroeconomic Effects of Social Security Spending: Evidence for 12 EU Countries”, CEFAGE-UE Working Paper 2014/8Google Scholar ↗

[refR-26] Pevcin, P. (2004), “Does optimal size of government spending exist?”, Retrieved from, working paper p 20-04.Google Scholar ↗

[refR-27] Piabuo S. M. and J. C. Tieguhong (2017), “Health expenditure and economic growth - a review of the literature and an analysis between the economic community for central African states (CEMAC) and selected African countries”, Health Economics Review, vol 7, No 23, p 1-13Google Scholar ↗

[refR-28] Pritchett L. (2001), “Where Has All the Education Gone?” World Bank Economic Review, volume 15, p 367-391.Google Scholar ↗

[refR-29] Pyo, H.K. (1995), “A time-series test of the endogenous growth model with human capital”, Retrieved from, working paper 8851.Google Scholar ↗

[refR-30] Rebelo, S.T. (1991), “Long-run policy analysis and long-run growth”, Journal of Political Economy, vol 99, No 3, p 500-521Google Scholar ↗

[refR-31] Romer, P.M. (1986), “Increasing returns and long run growth”, Journal of Political Economy, vol 94, No 5, p 1002-1037Google Scholar ↗

[refR-32] Stokey, N.L. (1991), “Human capital, product quality and growth”, Quarterly Journal of Economics, vol 106, No 2, p 587-616Google Scholar ↗