The Control Effect of Government Revenue on Government Expenditure and Economic Growth of the Kenya Government
- Country : Kenya
- Subject : Business and Management Sciences
Keywords : Government Expenditure, Government Revenue, Economic Growth, Kenya Government.
Abstract
Government expenditure in many developing countries is high because governments need to finance high expenditure development projects for purposes of achieving the targeted economic growth. These countries tax their citizens heavily to raise enough finances to finance their expenditures. Sometimes governments are forced to borrow since monies generated internally are not sufficient to finance both recurrent expenditures and high value capital projects. In quite a number of developing countries huge expenditures are incurred and instead of realizing high economic growth, the economic growth realized is dismal. It was thus feasible to establish the influence of the government revenue on the relationship between government expenditure and economic growth of the Kenyan government. The study employed a causal research design. The period under study ranged from 2002 to 2017. The study used secondary data which was extracted from the National Bureau of Statistics, and National Economic Surveys which were available at the Government of Kenya website. Correlation statistics were conducted to establish the association between variables. Regression analysis was used to establish the control effect of government revenue on the relationship between government expenditure and economic growth of the Kenya Government. The findings revealed that there was a significant effect of government expenditure on economic growth in Kenya. There was also found to be a strong relationship between government revenue and government expenditure and the control variable which is government revenue revealed a strong influence of government expenditure and government revenue on economic growth. Therefore, the control variable did not water the relationship. However on the joint effect (that is when the two predictor variables were grouped together to predict economic growth) the revealation is that it is only government expenditure which had a significant effect on economic growth since its p-value was less than 0.05 while government revenue did not have a significant effect on economic growth since the p-value was greater than 0.05.The study recommends that for a country to attain economic growth there is need to implement both expenditure and revenue measures by government.
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