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Public Spending Composition in Uganda and its Implications for Growth and Poverty Reduction

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  • Edward Batte Sennoga
  • John Mary Matovu

Abstract

This article examines the interrelationships between public spending composition and Uganda’s development goals including economic growth and poverty reduction. The authors utilize a dynamic computable general equilibrium model to study these interrelationships. These results demonstrate that public spending composition does indeed influence economic growth and poverty reduction. In particular, the authors show that improved public sector efficiency coupled with reallocation of public expenditure away from the unproductive sectors such as public administration and security to the productive sectors including agriculture, energy, water, and health leads to higher gross domestic product growth rates and accelerates poverty reduction. Moreover, the rate of poverty reduction is faster in rural households relative to the urban households. A major contribution of this article is that investments in agriculture, particularly with a view to promoting value addition and investing in complementary infrastructure (e.g., roads and affordable energy), contribute to higher economic growth rates and also accelerate the rate of poverty reduction.

Suggested Citation

  • Edward Batte Sennoga & John Mary Matovu, 2013. "Public Spending Composition in Uganda and its Implications for Growth and Poverty Reduction," Public Finance Review, , vol. 41(2), pages 227-247, March.
    • Handle: RePEc:sae:pubfin:v:41:y:2013:i:2:p:227-247
    DOI: 10.1177/1091142112448412
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    References listed on IDEAS

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    Cited by:

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    2. Karim, Azreen & Noy, Ilan, 2015. "The (mis) allocation of public spending in a low income country: Evidence from disaster risk reduction spending in Bangladesh," Working Paper Series 4194, Victoria University of Wellington, School of Economics and Finance.

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