Influence of infrastructure expenditure on gross domestic product growth in Kenya
Date
2021-07Author
Odada, John Ernest
Matara, Mwencha Joel
Obere, Almadi
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Government expenditure is a critical tool which governments usually use to bring about equitable
distribution of income and wealth and hence, create stability in prices, manage inflation, create employment
and spur growth. Kenya government spends substantial amounts of money annually on physical infrastructure,
education, health care, economic services, public order and national security, defense and general
administration. Therefore, the issue of which government expenditure can foster permanent movements in
economic growth becomes important. The main objective is to determine the influence infrastructure
expenditure on gross domestic product growth in Kenya. The study is informed by Solow growth theory.
Empirical methods are employed to analyze the influence infrastructure expenditure on gross domestic product
growth in the 47 counties of Kenya. The survey and evaluation program frame was adopted, and so was an
inductive ex post facto cross sectional quantitative survey design. Secondary panel data were collected from
National Treasury. Data for the period 2013-2017 were used to run a multiple regression using EViews
software. This study has adopted the basic growth accounting and used a production function model in which
the rate of economic growth is a function of labour, capital accumulation and factor productivity. The study
further adopted panel data approach to identify the parameters of concern and it covers a period of 5 years.
In analyzing data, the study has employed Hausman test which helps to choose fixed effects over random
effects. The significance of a regression coefficient is determined by use of the t-test statistic and the
significance tests are carried out at 95% confidence level or at the 5% level of significance. The study has
established that county government infrastructure expenditure is inversely related to, and important in
influencing, economic growth in Kenya.
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