Research Article
Government Spending and Economic Growth Nexus: A Contemporary Evidence in Sub-Saharan Africa
Isubalew Daba Ayana*
,
Wondaferahu Mulugeta Demissie,
Atnafu Gebremeskel Sore
Issue:
Volume 14, Issue 3, September 2025
Pages:
53-65
Received:
5 July 2025
Accepted:
19 July 2025
Published:
11 August 2025
Abstract: Motivated by empirical debates concerning the relationship between government expenditure and economic growth, this study examines the short and long-run effects of government expenditure on economic growth in 41 Sub-Saharan African countries from 2012-2022. The System GMM estimation technique was employed for the panel data obtained from World Development Indicators and the e-government Development Index. The safety of the data was duly checked by employing the LLC and IPS methods for unit root. The result of the study asserts that government expenditure adversely affects the economic growth of SSA in both the short and long run. The finding from the system GMM reveals that a one percentage change in government final consumption expenditure is associated with a 0.0342 percent decline in GDP per capita growth in the short run, while it leads to a 0.0045 decline in the GDP per capita growth of SSA countries, all other things kept constant. This shows that the negative effect of government expenditure in the long run is lower than its adverse effect in the short run. Further, unlike the short run, the adverse effect of the government expenditure is found to be insignificant in the long run. The policy implication is that SSA countries should carefully monitor their government spending in both the short and long run. Further, fiscal authorities of SSA countries are advised to direct the government expenditure to profitable projects. Finally, the faster GDP per capita growth in SSA countries demands a sharp focus on development sectors.
Abstract: Motivated by empirical debates concerning the relationship between government expenditure and economic growth, this study examines the short and long-run effects of government expenditure on economic growth in 41 Sub-Saharan African countries from 2012-2022. The System GMM estimation technique was employed for the panel data obtained from World Dev...
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Research Article
The Effect of Foreign Aid on Economic Growth in Ethiopia: Evidence from an ARDL Model (1991-2023)
Issue:
Volume 14, Issue 3, September 2025
Pages:
66-75
Received:
21 August 2025
Accepted:
1 September 2025
Published:
25 September 2025
DOI:
10.11648/j.eco.20251403.12
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Abstract: This study investigates the impact of foreign aid on Ethiopia’s economic growth over the period 1991-2023 using an Autoregressive Distributed Lag (ARDL) model. Despite being one of the largest recipients of official development assistance (ODA) in Sub-Saharan Africa, the effectiveness of aid in fostering sustainable growth in Ethiopia has remained a subject of debate. The study employs annual time-series data from the World Bank and the National Bank of Ethiopia, incorporating real GDP as the dependent variable and foreign aid as the key explanatory variable, alongside foreign direct investment (FDI), exchange rate, human capital, labor force participation, and political stability as additional regressors. The results reveal that foreign aid exerts a positive and significant effect on Ethiopia’s economic growth in the long run, complementing the role of FDI and human capital development. In the short run, however, the impact of foreign aid is relatively weaker and sometimes statistically insignificant. The findings suggest that foreign aid can be an important driver of economic growth in Ethiopia, provided that institutional quality and macroeconomic management are strengthened. Additionally, this research enriches the literature by integrating institutional quality and macroeconomic variables in a systematic ARDL framework, thus offering policy-relevant insights into Ethiopia’s growth trajectory.
Abstract: This study investigates the impact of foreign aid on Ethiopia’s economic growth over the period 1991-2023 using an Autoregressive Distributed Lag (ARDL) model. Despite being one of the largest recipients of official development assistance (ODA) in Sub-Saharan Africa, the effectiveness of aid in fostering sustainable growth in Ethiopia has remained ...
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Research Article
Willingness to Join and Pay for Community-Based Health Insurance Among Urban Households of Mettu Town, Oromia, South West Ethiopia in 2022
Issue:
Volume 14, Issue 3, September 2025
Pages:
76-86
Received:
19 April 2025
Accepted:
1 September 2025
Published:
26 September 2025
DOI:
10.11648/j.eco.20251403.13
Downloads:
Views:
Abstract: Background: Community-based health insurance (CBHI) is a non-profit health risk-pooling system for informal sectors. Its primary goal is to improve access to healthcare and provide financial protection against catastrophic medical expenses. In Ethiopia, 34% of healthcare funding comes from households’ out-of-pocket spending. This can lead to dire consequences, including financial ruin, debt, and the need to sell assets or forgo education. Avoiding care can result in long-term illness, disability, or death. Despite the urgent need for a solution, there has been a lack of empirical evidence on the willingness of urban populations in Ethiopia to participate in CBHI schemes, which is why this study was conducted. Methods: A mixed-methods, community-based, cross-sectional study was conducted in Mettu town from March 1 to 15, 2022. Quantitative data was collected using a pre-tested, structured questionnaire administered to 406 randomly selected households. For the qualitative portion, 18 participants were chosen via purposive sampling for three focused group discussions (FGDs). The quantitative data was analyzed using EPI Data 3.1 and SPSS ver. 20. Binary logistic regression was used to assess associations; variables with a P-value of ≤ 0.25 in the bivariate analysis were included in a multivariable logistic regression model. Variables with a P-value of < 0.05 in the final model were considered statistically significant predictors. The findings from the FGDs were triangulated with the quantitative results. Results: The study achieved a high response rate of 94.6%, with 384 of 406 participants completing the survey. The findings revealed a strong inclination towards CBHI, with 88.5% of participants willing to join the scheme. Among those willing to join, 87.6% were also willing to pay, representing 77.6% of the total study population. The statistical analysis identified several significant factors. Daily laborers were more than four times more likely to join than merchants (AOR: 4.15; 95% CI: 1.27-13.52). Households in the high-income quintile were also more than four times more likely to join compared to the middle-income group (AOR: 4.06; 95% CI: 1.18-14.00). Conversely, households in the lower-income quintile and those with a neutral perception of the quality of healthcare services had a statistically negative association with willingness to pay. The qualitative findings supported the quantitative data, with most participants finding the proposed scheme attractive but emphasizing the need to improve healthcare quality before implementation. Conclusion and Recommendations: The study concludes there is a high and promising willingness among urban households in Mettu town to join and pay for a CBHI scheme. The willingness to pay is, however, negatively influenced by perceptions of healthcare quality and income level. Despite these challenges, the study identifies a clear potential demand for such a program. Researchers suggest that for the successful execution and sustainability of the scheme, it is paramount to improve healthcare quality and to consider the financial capacity of lower-income families.
Abstract: Background: Community-based health insurance (CBHI) is a non-profit health risk-pooling system for informal sectors. Its primary goal is to improve access to healthcare and provide financial protection against catastrophic medical expenses. In Ethiopia, 34% of healthcare funding comes from households’ out-of-pocket spending. This can lead to dire c...
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