Effect of Government Agricultural Expenditure on Economic Growth: Evidence from a Developing Country

Megbowon Ebenezer Toyin (), Mothae Lerato and Relebohile Joseph Rapholo
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Megbowon Ebenezer Toyin: Walter Sisulu University, South Africa
Mothae Lerato: National University of Lesotho, Lesotho
Relebohile Joseph Rapholo: National University of Lesotho, Lesotho

Studia Universitatis Babeș-Bolyai Oeconomica, 2022, vol. 67, issue 2, 1-20

Abstract: Fiscal policy has been used by various governments to promote economic growth. The effectiveness of government expenditure on economic growth depends on recipient sector of government expenditure. This study contributes to this research area by investigating the effect of government agricultural expenditure on economic growth in the Kingdom of Lesotho. The government of Lesotho identified the agricultural sector as a productive sector that is central to the achievement the economic growth goal and development plan. Descriptive statistics and inferential econometric techniques (ARDL, DOLS and VEC Granger causality) over time-series data for the period 1982-2019 were utilized in this study. The results suggest that while current level and pattern of government agriculture expenditure cannot stimulate the desired economic growth and prosperity in the country, domestic investment appear to be a stimulant of the desired economic prosperity. Consequently, any economic growth policy or strategy that is premised on government agricultural sector expenditure would fail. Thus study recommends that countries including Lesotho should prioritize sustained increase in domestic investment.

Keywords: Government Expenditure; Agriculture Sector; Economic Growth; Keynesian Hypothesis (search for similar items in EconPapers)
JEL-codes: H50 O10 Q14 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:subboe:v:67:y:2022:i:2:p:1-20:n:2

DOI: 10.2478/subboec-2022-0006

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