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This study examined the impact of government expenditure on pro poor sectors in
reducing poverty in Kibaha district for the period of 2000 – 2009. The tool of analysis
used is error correction model and pair wise granger causality to examine the impact of
government expenditure on pro poor sectors for economic growth and poverty reduction.
Tanzania has been characterized by increased public expenditure on pro poor sectors yet,
it is experiencing an economic activity and pro poor growth been shrinking. For
example, inflation has fallen from 30% in 1995 to 4.4% in 2004 and GDP grew at 5.2%
in 2004, up from 2.6% in 1995. Despite these achievements, the decline in poverty has
been only 3% during the 1990s (from 39 to 36%). The main objective of this study is to
analysis the impact of government expenditure on pro-poor sectors in reducing poverty
in Kibaha district. Pro poor sectors mentioned in this study are agriculture, health,
education and roads.
This study carried out statistical examinations to ensure the data was valid and reliable.
Therefore, data diagnostics (stationery and unusual data) and good-fit model
specification test (time series properties, normality test, unit root test, autocorrelation
test, and cointegration test) were established. The study indicated that cointegration exist
only when Per Capital Income (PCI) act as dependent variable. A long run relationship
exists among PCI, road, health, education and agriculture expenditure in Kibaha district.
The result for causality shows that government health expenditure granger causes per
capital income and the causality runs from health expenditure to per capital income.
Moreover, the result shows that on average, government expenditure on education have
a positive significant effect on per capita income in Kibaha district. Others, government
expenditure on agriculture and roads have positive relationship on per capita income and
insignificant. Coefficient of health government expenditure has negative insignificant
relationship on per capita income. The results emphasize the importance of government
prioritization on its expenditure and spend. |
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