Assessing the Government Spending Efficiency in Africa: A Regional Analysis of Spending Efficiency with Stochastic Frontier Approach

Akinyele, Olawale Daniel; Odewole, Olawale Philip; Kosemani, Ifeoluwa

doi:10.22059/ier.2024.354702.1007629

Assessing the Government Spending Efficiency in Africa: A Regional Analysis of Spending Efficiency with Stochastic Frontier Approach

Document Type : Research Paper

Authors

Olawale Daniel Akinyele ¹

Olawale Philip Odewole ²

Ifeoluwa Kosemani ³

¹ Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria.

² Department of Accounting and Finance, Elizade University, Ondo, Nigeria.

³ Department of Economics, Elizade University, Ondo, Nigeria.

10.22059/ier.2024.354702.1007629

Abstract

The performance of any government is measured by improvement in its citizens’ well-being and the quality of life they live, which tends toward human development. The need to improve human development remains an age-long phenomenon, from millennium development to sustainable development over the last two decades. With the current global economic crisis triggered by the COVID-19 pandemic, supply chain crisis, and macroeconomic imbalance, a rise in government spending profile may not be feasible to inhibit fiscal deficit. More so, increased government spending over time among African countries has not translated to a rise in human development. Therefore, this study assessed government spending efficiency among African countries. The study adopts stochastic frontier analysis among 40 African countries between 2000 and 2020. There is relatively low efficiency in government spending among African countries. Meanwhile, the region of North Africa has the most efficient level of spending. However, to have all-round development in Africa, there is a need for African countries to be more focused. Spending efficiency has been remarkable in 2019/2020 across all regions of Africa. Countries like South Africa, Cameroon, Burkina-Faso, Mozambique, and Morocco were able to perform above the regional average of government spending efficiency. There are relative differences in spending patterns among African regions. The divergence in spending efficiency among African countries could be the reason for the different ranks of human development in Africa.

Keywords

efficiency

frontier analysis

government spending

human development

panel data

Subjects

Macroeconomics

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