The impact of government expenditure and sectoral investment on economic growth in South Africa

Daniel Francois Meyer, Tebogo Manete, Paul Francois Muzindutsi

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)

Abstract

Globally, but especially in developing countries, economic growth has been low since the financial crises in 2008/2009. Among the key factors that can stimulate growth are government spending and capital investments. The purpose of the study was to examine the effect of government expenditure and sectoral investment on economic growth in South Africa. Econometric methods including a VAR model were used to analyze the impact of government spending and investment in economic sectors on economic growth. This study used quarterly time series data from 1995 to 2016.Selected economic sectors were mining, manufacturing and financial sectors. The results of the Vector error correction model (VECM) indicated that in the short run only investment in the financial sector has a significant effect on economic growth in South Africa. However, the long-run results showed that only investment in manufacturing sector had a positive effect on economic growth, while the effect of government spending on economic growth was found to be minimal. It is proposed that more investment be attracted and directed towards economic sectors rather than on government spending.

Original languageEnglish
Pages (from-to)1842-1853
Number of pages12
JournalJournal of Advanced Research in Law and Economics
Volume8
Issue number6
DOIs
Publication statusPublished - 1 Sept 2017
Externally publishedYes

Keywords

  • Economic growth
  • Economic sectors
  • Government expenditure
  • Investment

ASJC Scopus subject areas

  • General Business,Management and Accounting
  • Economics and Econometrics
  • Political Science and International Relations
  • Law

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