Government Spending and Regional Poverty Alleviation: Evidence from Egypt

Poverty is one of the major socio-economic problems facing most developing countries. In Egypt, 29.7 percent of citizens live below the poverty line. The problem is more evident at the regional level, especially in Upper Egypt. Reducing poverty could be achieved through better allocation of government spending as it is considered an essential factor to promote economic growth, improve income distribution, and reduce poverty. Understanding the relationship between government spending and regional poverty reduction will help policymakers to design and implement programs that have the ability to reduce regional poverty and lessen income inequality effectively. This study aims to analyze the impact of government spending in alleviating regional poverty in Egypt. A panel data set for Egypt's 27 governorates through (2010-2018) has been employed. Using the two-way fixed effect regression model, the study finds that social government spending significantly affects poverty reduction across regions. At the regions level, health, education and social government expenditures have a significant negative impact on poverty, especially in Upper Egypt and Cairo regions.