This research endeavor myopically examines the deep relationship between public spending and economic growth in five selected Gulf Cooperation Council (GCC) countries by employing panel data from 2003 to 2022. Multiple linear regression was operated by hypothesizing and theorizing five explanatory variables. The OLS specifications explicitly demonstrate that public spending including education expenditure, health spending, general government spending and foreign direct investment, have no significant impact on economic growth. It was also clearly revealed that the other relevant explanatory variables including income from natural resources and population growth fairly left some prominent impact on economic growth. Moreover, statistical analysis confirmed that income generated from natural resources has a positive association with the economic growth while population growth has an indirect relationship with the economic growth. A paradigm shift in fiscal policy is desired to offer more public spending on projects associated to optimal utilization of natural resources. Moreover, government spending on health and education services should be course-targeted and resource specific rather than of generic nature. In future, more rigorous data may be taken up to advance the empirical research in this fiscal domain so as to arrive at some holistic policy messages.

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Effects of Public Spending on Economic Growth: Evidence from the GCC Countries

  • Salwa Abdulraquib,
  • Rozina Shaheen

摘要

This research endeavor myopically examines the deep relationship between public spending and economic growth in five selected Gulf Cooperation Council (GCC) countries by employing panel data from 2003 to 2022. Multiple linear regression was operated by hypothesizing and theorizing five explanatory variables. The OLS specifications explicitly demonstrate that public spending including education expenditure, health spending, general government spending and foreign direct investment, have no significant impact on economic growth. It was also clearly revealed that the other relevant explanatory variables including income from natural resources and population growth fairly left some prominent impact on economic growth. Moreover, statistical analysis confirmed that income generated from natural resources has a positive association with the economic growth while population growth has an indirect relationship with the economic growth. A paradigm shift in fiscal policy is desired to offer more public spending on projects associated to optimal utilization of natural resources. Moreover, government spending on health and education services should be course-targeted and resource specific rather than of generic nature. In future, more rigorous data may be taken up to advance the empirical research in this fiscal domain so as to arrive at some holistic policy messages.