Government Expenditure And Economic Growth In Bangladesh: An Empirical Investigation

The issue of the interrelationship between government expenditure and economic growth is a debatable issue among researchers and analysts in the field of economics.This study,therefore,sought to determine the causal relationship between government expenditure and economic growth in Bangladesh.The empirical results indicated the capital stock,government expenditure on education,and information technology expenditure have significant positive impacts on the growth rate of the Bangladeshi economy.The study also showed that government expenditure on the military was found to negatively affect the growth rate of the Bangladeshi economy in the long-run.However,the effects of total government expenditure and government expenditure on tourism sub-sector on economic growth were insignificant in Bangladesh.It was found that there is a unidirectional causality running from military expenditure and total government expenditure to economic growth as in the case of Bangladesh.Given the empirical evidence,it was established that the total government expenditure has not significantly instigated economic growth in Bangladesh.Thus,the capital and recurrent expenditure must be channeled particularly into productive economic activities.This will accelerate activities in the various sectors of the Bangladeshi economy and cause the government expenditure to positively impact on economic growth.