Exploring the Role of Government Spending in Fostering Economic Development in Kenya

Abstract

Abstract This research aims to examine the relationship between government spending and G.D.P growth in Kenya, given the lack of consensus on the topic globally. While there is agreement that some level of government expenditure is necessary for economic development, the specific areas of spending that are most beneficial still need to be clarified. Through extensive research, this study will examine the variables of public spending that have the most significant effect on Kenyan economic growth and whether there have been changes in the correlation between public expenditure and G.D.P. over time. This article uses A.R.D.L. model and Support Vector Machine to explore the effect of public spending on the Kenyan economy from 1980–2021. The variables used in the study include G.D.P., infrastructure, education, health, and defense expenditures. The study hypothesizes that increased investment in infrastructure, health, education, and defense spending lead to accelerated G.D.P. growth in Kenya. The results indicate that education has a negative effect on G.D.P. in the short run but a positive effect in the long run, while health and defense spending have a positive impact on G.D.P. Infrastructure spending has adverse impact on G.D.P. in both the short and long run, but its correlation is low. The study suggests that Kenya should increase funding for education and health, maintain defense spending, and improve infrastructure spending while addressing corruption and bureaucracy.