Government Expenditure And Sectoral Economic Growth In Kenya

Kenya is currently implementing the Second Medium Term Plan of Vision 2030. Growth objectives underpinning the Vision 2030 required the rate of growth of the economy to have risen from 6.1% achieved in the year 2006 to 10% in the year 2012. However, the economy recorded only 4.5% and 5.7% growth in the year 2012 and the year 2013 respectively. Even so, the government has continually spent substantial amounts of money annually to finance key Sectors in implementing Vision 2030 flagship projects, with the effect of this being fluctuations and inundations in Sectoral economic growth. Noteworthy, several studies have been carried out in Kenya to explain discrepancy between government expenditure and economic growth, but study findings have showed conflicting outcomes. Besides that, these studies have not integrated inflation, corruption and political risk that from literature have been seen as critical moderators of the relationship between government expenditure and Sectoral economic growth. This study, therefore, sought to bridge this gap by determining the effect of government expenditure on Sectoral economic growth with corruption, inflation and political risk moderating the hypothesized relationship. The general objective of this study was to investigate the effect of government expenditure on Sectoral economic growth in Kenya whereas the study specifically sought to establish the effects of current expenditure, capital expenditure and debt servicing on Sectoral economic growth in Kenya as well as the moderating effect of inflation, corruption and political risk on the relationship between government expenditure and Sectoral economic growth.