IDEAS home Printed from https://ideas.repec.org/a/spt/fininv/v14y2025i2f14_2_2.html
   My bibliography  Save this article

Does Private Sector Growth Mediate the Relationship Between Government Expenditure and Economic Growth? Evidence From East African Community Countries

Author

Listed:
  • Doreen K. Mutegi
  • Mirie Mwangi
  • Josephat L. Lishenga
  • Samuel Nyandemo

Abstract

The study assessed the mediating role of Private Sector Growth (PSG) in the relationship between Government Expenditure (GE) and Economic Growth (EG) across East African Community (EAC) countries from 1970 to 2022. Using panel data from six member states and mediation analysis, the study results reveal that PSG partially mediates the GE–EG relationship. This suggests that while GE has a direct positive impact on EG, it also enhances growth indirectly by stimulating private sector performance. Grounded in Keynesian and endogenous growth theories, the findings emphasize that public investment can unlock private sector potential and drive long-term economic development. The study indicates the need to align fiscal policy with private sector development strategies to achieve more sustained growth. While regional integration efforts aim to foster collective growth, persistent disparities in EG across EAC countries highlight the need for a more harmonized and coordinated regional framework. Prioritizing GE in sectors with strong private sector spillovers, conducting regular fiscal audits, and reducing regulatory barriers are essential for enhancing the effectiveness of public investment. By leveraging PSG as a mediating force, EAC countries can better align fiscal policy with regional development goals, enabling a more inclusive and balanced transformation across member states.

Suggested Citation

  • Doreen K. Mutegi & Mirie Mwangi & Josephat L. Lishenga & Samuel Nyandemo, 2025. "Does Private Sector Growth Mediate the Relationship Between Government Expenditure and Economic Growth? Evidence From East African Community Countries," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 14(2), pages 1-2.
    • Handle: RePEc:spt:fininv:v:14:y:2025:i:2:f:14_2_2
    as

    Download full text from publisher

    File URL: http://www.scienpress.com/Upload/JFIA%2fVol%2014_2_2.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spt:fininv:v:14:y:2025:i:2:f:14_2_2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.scienpress.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.