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Public spending composition and public sector efficiency: Implications for growth and poverty reduction in Uganda

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  • Sennoga, Edward B.
  • Matovu, John Mary

Abstract

The paper examines the interrelationships between public spending composition and Uganda's development goals including economic growth and poverty reduction. We utilize a dynamic CGE model to study these interrelationships. This paper demonstrates that public spending composition does indeed influence economic growth and poverty reduction. In particular, this study shows that improved public sector efficiency coupled with re-allocation 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 GDP growth rates and accelerates poverty reduction. Moreover, the rate of poverty is faster in rural households relative to the urban households. A major contribution of this paper is that investments in agriculture particularly with a view of promoting value addition and investing in complementary infrastructure including roads and affordable energy contributes to higher economic growth rates and also accelerates the rate of poverty reduction.

Suggested Citation

  • Sennoga, Edward B. & Matovu, John Mary, 2010. "Public spending composition and public sector efficiency: Implications for growth and poverty reduction in Uganda," Research Series 93808, Economic Policy Research Centre (EPRC).
    • Handle: RePEc:ags:eprcrs:93808
    DOI: 10.22004/ag.econ.93808
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    References listed on IDEAS

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    1. World Bank, 2002. "The Republic of Uganda - Public Expenditure Review : Report on the Progress and Challenges of Budget Reforms," World Bank Publications - Reports 15336, The World Bank Group.
    2. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    3. Mr. John J Matovu & Ms. Era Dabla-Norris, 2002. "Composition of Government Expenditures and Demand for Education in Developing Countries," IMF Working Papers 2002/078, International Monetary Fund.
    4. David Alan Aschauer, 1998. "Optimal Financing by Money and Taxes of Productive and Unproductive Government Spending: Effects on Economic Growth, Inflation, and Welfare," Economics Working Paper Archive wp_241, Levy Economics Institute.
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    Citations

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    Cited by:

    1. Michael Tribe, 2013. "Aid and development: Issues and reflections," Working Papers 1309, University of Strathclyde Business School, Department of Economics.
    2. Buyinza, Faisal, 2011. "Performance and Survival of Ugandan Manufacturing firms in the context of the East African Community," Research Series 150477, Economic Policy Research Centre (EPRC).
    3. Wiebelt, Manfred & Pauw, Karl & Matovu, John Mary & Twimukye, Evarist & Benson, Todd, 2011. "Managing future oil revenues in Uganda for agricultural development and poverty reduction: A CGE analysis of challenges and options," Kiel Working Papers 1696, Kiel Institute for the World Economy (IfW Kiel).
    4. Jean-Marc Montaud & Mahamadou Roufahi Tankari, 2013. "When social goals meet economic goals: the double dividend of extending free access to healthcare in Uganda," Working Papers hal-01880339, HAL.
    5. P Sivashankar & RMPS Rathnayake & Maneka Jayasinghe & Christine Smith, 2017. "Incidence of value added taxation on inequality: Evidence from Sri Lanka," Discussion Papers in Economics economics:201704, Griffith University, Department of Accounting, Finance and Economics.
    6. Jean-Marc Montaud & Mahamadou Roufahi Tankari, 2013. "When social goals meet economic goals: the double dividend of extending free access to healthcare in Uganda," Working Papers hal-01880339, HAL.
    7. Okoboi, Godfrey & Barungi, Mildred, 2012. "Constraints to Fertiliser Use in Uganda: Insights from Uganda Census of Agriculture 2008/9," Research Series 150240, Economic Policy Research Centre (EPRC).
    8. Véronique Robichaud & Luca Tiberti & Hélène Maisonnave, 2014. "Impact of increased public education spending on growth and poverty in Uganda. An integrated micro-macro approach," Working Papers MPIA 2014-01, PEP-MPIA.

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