Productive Government Expenditure and Economic Performance in sub-Saharan Africa: An Empirical Investigation

Abstract

This study examined the effect of government expenditure on its disaggregated level on economic growth in a sample of 20 sub-Saharan African Countries over the period of 1980-2010 in a dynamic panel data model. The result from Generalised Method of Moments (GMM) revealed an inverse relationship between productive government expenditure and economic growth in sub-Sahara Africa. Also, productive government expenditures were not actually productive most especially when financed by non-distortonary government tax revenue in sub-Saharan African countries. The study concluded that the productive government expenditure and its corresponding source of the mode of financing were counterproductive for economic performance in the African countries.