The Impacts of government capital expenditure on economic growth

Author

Homani, Liberty.

Title

The Impacts of government capital expenditure on economic growth

Abstract

This study investigated the impact of government capital expenditure on economic growth in Zimbabwe from 1980 to 2021. Using the Autoregressive Distributed Lag (ARDL) approach, the study found a statistically significant negative impact of government capital expenditure on economic growth in the short run, but an insignificant positive impact in the long run. The study also examined the mediating effects of electric power consumption, population growth, and government recurrent expenditure, revealing a positive impact of electric power consumption and population growth on GDP growth in both the short and long run. Government recurrent expenditure showed a positive effect in the short run but a negative effect in the long run. Additionally, the study documented a rapid short-run speed of adjustment towards long-run equilibrium of 130.857%. These findings suggest that the Zimbabwean government should prioritize investments in productive, high-return infrastructure projects, expand the energy sector, balance its spending priorities, and invest in human capital development to foster sustainable economic growth.

Date

June 2024

Publisher

BUSE

Keywords

Economic growth,

Capital expenditure,

Autoregressive Distributed Lag,

Supervisor

Dr. Chigusiwa,