Effects of Public Expenditure on Economic Growth in the CEMAC Subregion: A Comparative Analysis between the Fragile and Non-fragile States

Nembot Ndeffo Luc, Andre Melachio Tameko and Kos A Mougnol Alice

Working Papers from African Economic Research Consortium

Abstract: Chad, Central African Republic, and Congo have been identified by the African Development Bank as fragile states. Despite their socio-political stability, the other countries of the subregion, which are Cameroon, Gabon, and Equatorial Guinea, are exposed to risks of various kinds related to refugees from neighbouring countries and war against the Islamic sect Boko Haram. This study aims at carrying out a comparative analysis of the effects of public spending on economic growth in the aforementioned six countries by highlighting the differential effects of investment spending and consumption spending. The study covers the period 1975-2016. Time series regressions using the ARDL approach is applied. Taking into account the threshold effects for each country and each type of expenditure seems important for better formulation of policy recommendations. The results reveal a stable long-run relationship between public expenditure and the economic growth rate in the CEMAC subregion. Policies aiming at increasing the share of public investment expenditure to the detriment of public operating expenditure are recommended. Public expenditure should also be oriented towards productive development projects.

Date: 2021-05-22
Note: African Economic Research Consortium
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