Effects of Public Expenditure Growth on Economic Growth in Kenya

The effect of public expenditure growth on economic growth has given rise to conflicting views among economists. Some view a large government size as harmful to economic growth due to inefficiencies inherent in government. The other group of economists argues that a larger size of government is likely to enhance economic growth. Kenya’s public expenditure has been experiencing rapid growth since 1963, while GDP growth over the same period has not followed the same path. The main objective of this study was to examine the effects of government size on economic growth in Kenya for the period 1971-2021.The study used secondary data extracted from Economic Surveys, Statistical Abstracts published by the Kenya National bureau of Statistics and Kenya Institute of Public Policy Research for the period 1971-2021. The(Autoregressive distributed lag (ARDL) model was used to test the causal link between public expenditure growth and economic growth in Kenya during the period. The long run regression results showed that the effect of recurrent expenditure on economic growth was non-significant while the effect of development expenditure was significant. The study recommended government to slow recurrent expenditure to tame
growth of public expenditure.