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Effect of Government Agricultural Expenditure on Economic Growth: Evidence from a Developing Country

Author

Listed:
  • Megbowon Ebenezer Toyin

    (Walter Sisulu University, South Africa)

  • Mothae Lerato

    (National University of Lesotho, Lesotho)

  • Relebohile Joseph Rapholo

    (National University of Lesotho, Lesotho)

Abstract

Fiscal policy has been used by various governments to promote economic growth. The effectiveness of government expenditure on economic growth depends on recipient sector of government expenditure. This study contributes to this research area by investigating the effect of government agricultural expenditure on economic growth in the Kingdom of Lesotho. The government of Lesotho identified the agricultural sector as a productive sector that is central to the achievement the economic growth goal and development plan. Descriptive statistics and inferential econometric techniques (ARDL, DOLS and VEC Granger causality) over time-series data for the period 1982-2019 were utilized in this study. The results suggest that while current level and pattern of government agriculture expenditure cannot stimulate the desired economic growth and prosperity in the country, domestic investment appear to be a stimulant of the desired economic prosperity. Consequently, any economic growth policy or strategy that is premised on government agricultural sector expenditure would fail. Thus study recommends that countries including Lesotho should prioritize sustained increase in domestic investment.

Suggested Citation

  • Megbowon Ebenezer Toyin & Mothae Lerato & Relebohile Joseph Rapholo, 2022. "Effect of Government Agricultural Expenditure on Economic Growth: Evidence from a Developing Country," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 67(2), pages 1-20, August.
    • Handle: RePEc:vrs:subboe:v:67:y:2022:i:2:p:1-20:n:2
    DOI: 10.2478/subboec-2022-0006
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    References listed on IDEAS

    as
    1. Deepti Ahuja & Deepak Pandit, 2020. "Public Expenditure and Economic Growth: Evidence from the Developing Countries," FIIB Business Review, , vol. 9(3), pages 228-236, September.
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    More about this item

    Keywords

    Government Expenditure; Agriculture Sector; Economic Growth; Keynesian Hypothesis;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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