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Democracy, Government Spending and Economic Growth: The Case of Ghana, 1960–2008

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  • Daniel Sakyi

    (Daniel Sakyi is at the Department of Economics, KNUST, Kumasi, Ghana, Tel: 233-3220-60269, email: dsakyi2003@yahoo.com)

  • Samuel Adams

Abstract

Economic theory predicts a growth enhancing activities of various core functions of government. Nonetheless, government spending in non-democratic countries often goes beyond these core functions, namely into rent-seeking and non-productive activities. This paper employs the Autoregressive Distributed Lag bounds testing approach to cointegration to investigate the extent to which democracy and government spending have had an impact on economic growth in Ghana over the period 1960–2008. The empirical results obtained are encouraging, revealing support for the high effi ciency of government spending in democracies’ hypothesis. The paper demonstrates that democracy and government spending go hand in hand to have a positive impact on economic growth in Ghana in both the long and short run. The fi ndings and policy recommendations of the paper provide vital information relevant for developing countries involved in the democratisation process. JEL Classification : C22, H50, O40

Suggested Citation

  • Daniel Sakyi & Samuel Adams, 2012. "Democracy, Government Spending and Economic Growth: The Case of Ghana, 1960–2008," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 6(3), pages 361-383, August.
    • Handle: RePEc:sae:mareco:v:6:y:2012:i:3:p:361-383
    DOI: 10.1177/097380101200600303
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    2. Adams, Samuel & Klobodu, Edem Kwame Mensah & Opoku, Eric Evans Osei, 2016. "Energy consumption, political regime and economic growth in sub-Saharan Africa," Energy Policy, Elsevier, vol. 96(C), pages 36-44.
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    More about this item

    Keywords

    Democracy; Government Spending; Economic Growth; Cointegration; Ghana;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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