📄 Abstract
This study investigates the long-run relationships and causal interactions between public sector expenditure, government effectiveness, and economic growth in Sub-Saharan Africa (SSA) over the period 2000-2023.The research is motivated by persistent ambiguities concerning whether public expenditure stimulates economic growth or adjusts in response to it, as well as the role of government effectiveness in facilitating this process. Public sector expenditure is disaggregated into allocations for education, health, defence, and public debt servicing to account for variations in the economic implications of different expenditure categories. The analysis employs panel data from 16 SSA countries and applies panel unit root tests, Pedroni and Kao cointegration tests, and panel Granger causality techniques, including the stacked common-coefficient approach, the Dumitrescu-Hurlin heterogeneous panel causality test, and a panel vector autoregression (PVAR) framework. Unit root tests indicate that all variables become stationary after first differencing, while cointegration tests confirm the presence of stable long-run relationships among the variables. The causality results show bidirectional causality between education expenditure and economic growth. Economnic growth is found to Granger-cause defence expenditure and public debt servicing, whereas no causal relationship is detected between health expenditure and economic growth. Government effectiveness exhibits a unidirectional causal relationship with economic growth, with causality running from government effectiveness to economic growth. These findings suggest that the expenditure-growth nexus in SSA is neither uniform across expenditure types nor exclusively driven by expenditure. The study concludes that both institutional quality and the composition of public expenditure are critical to understanding the long-term fiscal-growth dynamics in the region. Accordingly, enhancing government effectiveness, alongside improving the productive allocation and management of public resources, is essential for translating fiscal expenditure into sustainable growth outcomes.
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📚 How to Cite:
AREMU, Jamiu Muhammed, BABADE Isaac Tolu, ADEKOYE, Fatimo Temidayo , ECONOMIC GROWTH IN SUB-SAHARAN AFRICA: THE ROLE OF PUBLIC SECTOR EXPENDITURE AND GOVERNMENT EFFECTIVENESS , Volume 13 , Issue 9, September 2026, EPRA International Journal of Economics, Business and Management Studies (EBMS) , Pages: 50 - 57 ,