IDEAS home Printed from https://ideas.repec.org/a/wly/sustdv/v32y2024i6p6241-6252.html
   My bibliography  Save this article

Public expenditure and economic sustainability: Does institutional quality matter?

Author

Listed:
  • Silas Apealete Kpegba
  • Lord Kelvin Kofi Atisu
  • Kelvin Nketiah Sarfo
  • Clement Oppong
  • Ellis Kofi Akwaa‐Sekyi

Abstract

This study aims to provide an empirical insight into whether institutional quality moderates the impact of public expenditure on economic sustainability among the Sub‐Saharan African (SSA) countries. Using a quantitative and explanatory research design, this study sourced a 20‐year longitudinal dataset on 48 SSA countries from the World Development Indicators (WDI) and World Governance Indicators (WGI) databases from 2003 to 2022. Both Pooled OLS and System GMM econometric techniques were employed for analysis. It was found that public expenditure and institutional quality positively and significantly influence economic sustainability. However, institutional quality was found to negatively and significantly moderate this relationship. The practical implication suggests nations may face a trade‐off between maintaining institutional quality and ensuring long‐term economic sustainability. The moderation effect of institutional quality is novel in nature and adds to the body of existing literature.

Suggested Citation

  • Silas Apealete Kpegba & Lord Kelvin Kofi Atisu & Kelvin Nketiah Sarfo & Clement Oppong & Ellis Kofi Akwaa‐Sekyi, 2024. "Public expenditure and economic sustainability: Does institutional quality matter?," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(6), pages 6241-6252, December.
  • Handle: RePEc:wly:sustdv:v:32:y:2024:i:6:p:6241-6252
    DOI: 10.1002/sd.3024
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/sd.3024
    Download Restriction: no

    File URL: https://libkey.io/10.1002/sd.3024?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Daniel Kaufmann & Aart Kraay, 2008. "Governance Indicators: Where Are We, Where Should We Be Going?," The World Bank Research Observer, World Bank, vol. 23(1), pages 1-30, January.
    2. George S. Chen & Emmanuel Kwaku Manu & Dennis Asante, 2023. "Achieving environmental sustainability in Africa: The role of financial institutions development on carbon emissions," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(5), pages 3272-3290, October.
    3. Stephen Taiwo Onifade & Savaş Çevik & Savaş Erdoğan & Simplice Asongu & Festus Victor Bekun, 2020. "An empirical retrospect of the impacts of government expenditures on economic growth: new evidence from the Nigerian economy," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-13, December.
    4. Kwasi Poku & Emmanuel Opoku & Priscilla Agyeiwaa Ennin, 2022. "The influence of government expenditure on economic growth in Ghana: An Ardl approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2160036-216, December.
    5. Bishwa S. Koirala & Gyan Pradhan, 2020. "Determinants of sustainable development: Evidence from 12 Asian countries," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(1), pages 39-45, January.
    6. Arvin, Mak B. & Pradhan, Rudra P. & Nair, Mahendhiran S., 2021. "Are there links between institutional quality, government expenditure, tax revenue and economic growth? Evidence from low-income and lower middle-income countries," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 468-489.
    7. Arshad Hayat, 2019. "Foreign direct investments, institutional quality, and economic growth," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(5), pages 561-579, July.
    8. Boniface Ngah Epo & Dief Reagen Nochi Faha, 2020. "Natural Resources, Institutional Quality, and Economic Growth: an African Tale," Post-Print halshs-02157588, HAL.
    9. McGrath, Luke & Hynes, Stephen & McHale, John, 2019. "Augmenting the World Bank's estimates: Ireland's genuine savings through boom and bust," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    10. Boniface Ngah Epo & Dief Reagen Nochi Faha, 2020. "Natural Resources, Institutional Quality, and Economic Growth: an African Tale," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(1), pages 99-128, January.
    11. Nyasha Sheilla & Odhiambo Nicholas M., 2019. "The Impact of Public Expenditure on Economic Growth: A Review of International Literature," Folia Oeconomica Stetinensia, Sciendo, vol. 19(2), pages 81-101, December.
    12. Phuc Canh, Nguyen & Schinckus, Christophe & Thanh, Su Dinh, 2019. "Do economic openness and institutional quality influence patents? Evidence from GMM systems estimates," International Economics, Elsevier, vol. 157(C), pages 134-169.
    13. Syeda Tayyaba Ijaz & Sumayya Chughtai, 2022. "The Impact of Financial, Economic and Environmental Factors on Energy Efficiency, Intensity, and Dependence: The Moderating Role of Governance and Institutional Quality," International Journal of Energy Economics and Policy, Econjournals, vol. 12(4), pages 15-31, July.
    14. Clement Oppong & Abukari Salifu Atchulo & Shenell Fatia Oman, 2023. "Public debt and economic growth nexus in sub-saharan Africa: does institutional quality matter?," International Review of Applied Economics, Taylor & Francis Journals, vol. 37(3), pages 311-323, May.
    15. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    16. Hazwan Haini, 2020. "Examining the relationship between finance, institutions and economic growth: evidence from the ASEAN economies," Economic Change and Restructuring, Springer, vol. 53(4), pages 519-542, November.
    17. Md. Saiful Islam & Al Jamal Mustafa Shindaini, 2022. "Impact of institutional quality and human capital creation on economic growth in Bangladesh: evidence from an ARDL approach," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 49(12), pages 1787-1802, July.
    18. Isaiah Sikayena & Isaac Bentum-Ennin & Francis K. Andoh & Richard Asravor, 2022. "Efficiency of public spending on human capital in Africa," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2140905-214, December.
    19. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    20. Abdulahi, Mohamued Elyas & Shu, Yang & Khan, Muhammad Asif, 2019. "Resource rents, economic growth, and the role of institutional quality: A panel threshold analysis," Resources Policy, Elsevier, vol. 61(C), pages 293-303.
    21. Megha Chhabra & Arun Kumar Giri & Arya Kumar, 2023. "What Shapes Economic Growth in BRICS? Exploring the Role of Institutional Quality and Trade Openness," Economic Papers, The Economic Society of Australia, vol. 42(4), pages 347-365, December.
    22. Samina Sabir & Meshal Qamar, 2019. "Fiscal policy, institutions and inclusive growth: evidence from the developing Asian countries," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 46(6), pages 822-837, June.
    23. Atif Jahanger & Muhammad Usman & Daniel Balsalobre‐Lorente, 2022. "Linking institutional quality to environmental sustainability," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1749-1765, December.
    24. Gheorghița Dincă & Marius Sorin Dincă & Camelia Negri & Mihaela Bărbuță, 2021. "The Impact of Corruption and Rent-Seeking Behavior upon Economic Wealth in the European Union from a Public Choice Approach," Sustainability, MDPI, vol. 13(12), pages 1-23, June.
    25. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    26. Wandeda, Dickson O. & Masai, Wafula & Myandemo, Samuel M., 2021. "Institutional quality and economic growth: evidence from Sub-Saharan Africa countries," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Baah Aye Kusi, 2023. "Exploring the nonlinear effect of shadow economies on sustainable development in Africa: does the level of financial market development matter?," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 15(6), pages 551-572, October.
    2. Musa Khan & Wu Chao & Muhammad Atif Khan & Mohammed Arshad Khan & Ahsanuddin Haider, 2025. "The role of natural resources and press freedom in sustainable development," Natural Resources Forum, Blackwell Publishing, vol. 49(1), pages 863-883, February.
    3. Peterson K. Ozili & Paul Terhemba Iorember, 2024. "Financial stability and sustainable development," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 2620-2646, July.
    4. Gnangnon, Sèna Kimm, 2021. "Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Growth in Beneficiary Countries," EconStor Preprints 242848, ZBW - Leibniz Information Centre for Economics.
    5. Njangang, Henri & Asongu, Simplice A. & Tadadjeu, Sosson & Nounamo, Yann & Kamguia, Brice, 2022. "Governance in mitigating the effect of oil wealth on wealth inequality: A cross-country analysis of policy thresholds," Resources Policy, Elsevier, vol. 76(C).
    6. Canh P. Nguyen & Christophe Schinckus & Dinh Su Thanh, 2020. "Economic Fluctuations And The Shadow Economy: A Global Study," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 1-24, September.
    7. Tadadjeu, Sosson & Njangang, Henri & Asongu, Simplice A. & Kamguia, Brice, 2023. "Natural resources, child mortality and governance quality in African countries," Resources Policy, Elsevier, vol. 83(C).
    8. Lawal, Adedoyin Isola & Ozturk, Ilhan & Olanipekun, Ifedolapo O. & Asaleye, Abiola John, 2020. "Examining the linkages between electricity consumption and economic growth in African economies," Energy, Elsevier, vol. 208(C).
    9. Pham Thai Binh & Trang Thi Thuy Nguyen, 2024. "Do institutions advocate tax simplification? Insights from a panel of 88 countries," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-39, June.
    10. Cristiana Tudor & Robert Sova, 2022. "Driving Factors for R&D Intensity: Evidence from Global and Income-Level Panels," Sustainability, MDPI, vol. 14(3), pages 1-16, February.
    11. Phuc Canh, Nguyen & Trung Thong, Nguyen, 2020. "Nexus between financialisation and natural resources rents: Empirical evidence in a global sample," Resources Policy, Elsevier, vol. 66(C).
    12. Isaac Ofoeda & Lordina Amoah & Ebenezer Bugri Anarfo & Joshua Yindenaba Abor, 2024. "Financial inclusion and economic growth: What roles do institutions and financial regulation play?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 832-848, January.
    13. Ahmet Şit & Magdalena Radulescu & Hakan Güneş & Hamis Miraji Ally Simba & Mustafa Şit & Haydar Karadağ, 2024. "Rethinking of Government Institutions and Governance Quality Indicators on Economic Growth in Sub-Saharan African Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 20883-20905, December.
    14. Leogrande, Angelo, 2023. "The Rule of Law in the ESG Framework in the World Economy," MPRA Paper 116293, University Library of Munich, Germany.
    15. Marwa Sahnoun & Chokri Abdennadher, 2022. "Returns to Investment in Education in the OECD Countries: Does Governance Quality Matter?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(3), pages 1819-1842, September.
    16. Imelda, Foudjo Suzie & Nabil Aman, Ndikeu Njoya & Joseph, Keneck-Massil, 2024. "Do natural resources influence E-government in developing countries? Effects and transmission channels," Resources Policy, Elsevier, vol. 98(C).
    17. Tereza Nìmeèková & Arshad Hayat, 2022. "Does trade openness improve the quality of domestic institutions? Evidence from Africa," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(4), pages 881-908, December.
    18. Mansor H. Ibrahim & Siong Hook Law, 2016. "Institutional Quality and CO 2 Emission–Trade Relations: Evidence from Sub-Saharan Africa," South African Journal of Economics, Economic Society of South Africa, vol. 84(2), pages 323-340, June.
    19. Khan, Muhammad Atif & Gu, Lulu & Khan, Muhammad Asif & Oláh, Judit, 2020. "Natural resources and financial development: The role of institutional quality," Journal of Multinational Financial Management, Elsevier, vol. 56(C).
    20. Imen Mohamed Sghaier, 2022. "The Role of Institutional Quality in Finance-Growth Nexus: Evidence from North African Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 3472-3491, December.

    More about this item

    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:wly:sustdv:v:32:y:2024:i:6:p:6241-6252. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-1719 .

    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.