Using an empirical model linking public debt to public investment, this study uses annual data from 1970-2010 and employs panel fixed-effects approach to estimate the effect of external and public debt, as a share of Gross Domestic Product (GDP), on public investment in East Africa Community (EAC). Levin-Lin-Chu test (LLC) and Engle-Granger approach were used to investigate the properties of the data with respect to Unit roots and Cointegration respectively. The Hausman specification test was...
The goal of this research was to investigate empirically how government expenditurecontributes to economic growth in East Africa from 1980-2010. Using balanced panel fixedeffect model, government expenditure was disaggregated to scrutinize its effect of growth.The study tested for panel unit root and found that only two variables, that is, GDP andinvestment expenditure are stationary at level. The finding confirms the conventional viewthat relative investment expenditure promotes economic gro...
Over the period of thirty four years, between 1981 and 2015, the East African Community economies have witnessed inconsistent and downward trend on the level of private investments as percentage of GDP. Several studies have been done regarding the determinants of private investment at country level while others have focused on budget/fiscal deficit, regional integration and economic growth but the findings are inconsistent. However, from the empirical literature review, most of the studies ig...
This paper empirically explores the effect of domestic debt, as a share of Gross Domestic Product (GDP), on economic growth in the East Africa Community (EAC) over the period 1990-2010. This study was based on the Solow growth model augmented for debt. Levin-Lin-Chu test (LLC) was used to investigate the properties of the data with respect to Unit roots. The Hausman specification test was used to select the panel fixed-effects model, which was corrected for heteroscedasticity. The results sho...
The rationale of this study was to examine empirically how components of public sector size relates to GDP growth in East Africa from 1985-2015. Using balanced panel fixed or random effect model, public sector expenditure was disaggregated to scrutinize its effect of growth. The research tested for panel unit root and found that only two variables, that is, real GDP growth and capital spending - are stationary at level. The finding confirms the conventional view that relative capital spending...
This research scrutinizes economic expansion, CO2 emissions and energy utilization relationship in Kenya by using FMOLS estimate. This study considers the causality matters among oil (Non renewable), electricity (Renewable) use, CO2 emissions, and GDP growth in Kenya by employing time series techniques and annual data for the period 1980–2017. The obtained empirical results from this study indicate that CO2 emissions and electricity effect negatively economic expansion while oil consumption...
The paper investigated the interactive effect of agricultural capital and labour input and research and development on agricultural sector expansion in East African Community between the period 2000 and 2014. According to the endogenous growth theory, research and development leads to increase in the stock of knowledge which in turn has got spillover effects hence leads to economic growth. However, empirical studies on the interactive effect on the agricultural sector are minimal in the EAC h...
his study empirically examined the effect of research and development on agricultural sector growthin East African Community from the year 2000-2014. According to the endogenous growth theory,research and development leads to increase in the stock of knowledge which in turn has got spill overeffects hence leads to economic growth. However, little is known on the effect of R&D on theagricultural sector in the EAC hence the study sought to bridge this knowledge gap. The objective ofthis study w...
Attaining a monetary union is an ambition for most regional economic blocks. However, the arrangement towards monetary union for the East African nations has remained indifferent. The inflation rate is critical for EAC members to achieve a level of harmonization required for establishing a stable and sustainable monetary union. Most existing studies on the relationship show conflicting results and mainly focus on developed countries. It was against this backdrop that the study sought to deter...
From previous studies, the effects of expenditure on economic growth appear to provide mixed results. Despite this uncertainty, theory suggests that expenditure induce growth. In Kenya, economic growth has been fluctuating despite the devolved expenditure increasing over time. It is against this background that this study was carried out to investigate empirically the short-run and long-run effect of components of county spending on growth in Kenya using panel data set over the period 2013 to...
Although it is theoretically expected that fiscal decentralization leads to efficient provision of local public servicesand induces economic growth, there is a mixed outcome of the non-devolved and devolved effect on economicexpansion across earlier empirical studies. This could be due to non growth-enhancing expenditures that crowdoutoutlays that are meant to boost economic growth. Further, devolved allocation is small, about 15 % of totalrevenue, to full stimulate economic growth in Kenya. ...
Using annual data from 1970-2010, this paper employs a panel fixed-effects model to estimate the effect of external debt, as a share of Gross Domestic Product (GDP), on economic growth in East Africa Community (EAC). This study was based on the Solow growth model augmented for debt. The Levin-Lin-Chu test (LLC) approach was used to investigate the properties of the data with respect to unit roots. The Hausman specification test was used to verify the panel fixed-effects model. The findings su...
This study, assuming a balanced budget, attempts to estimate the optimal devolved government size in Kenyausing the panel ARDL regression and Scully (2008) model for the period 2013-2017. The optimal devolvedgovernment size is determined to be around 9.7 percent of the GCP (Gross County Product). The estimatedthreshold size is higher than the current size of county government which stands at 5.4% of GCP. The panelanalysis suggests that the optimal size of government is higher than the current...
he level of private investment in Kenya, Rwanda and Burundi (KRB), as a percentage of real Gross Domestic Product, has been fluctuating over time since independence. Several studies have been carried out on regard to the macroeconomic determinants of private investment at country level, but the findings are inconclusive. Conversely, from the empirical literature review, these studies have failed to capture the impact of availability of credit on private investment in the three states. It is a...
The major objective of this study is scrutinizing the impact of government sectoral expenditure on economic growth in East African countries over the period from 1985 to 2015. It focuses on sectoral expenditures on health, education, defence and agriculture segments. The main contribution of this research is examining expenditure components in line with current government categorization to establish these sectoral budget allocations that have impact on economic growth in order to provide a gu...