The role of government expenditure in shaping ASEAN economic growth: A panel autoregressive distributed lag approach
List of Authors
  • NurHaiza Nordin , NurNaddia Nordin

Keyword
  • Government Development Expenditure, Economic Growth, ASEAN Countries, Panel ARDL

Abstract
  • This study uses a quantitative technique to investigate the relationship between government spending and economic progress in ASEAN nations. The paper examines yearly secondary data from eleven ASEAN states between 2000 and 2022 using panel data analysis. The panel autoregressive distributed lag (ARDL) technique is employed in the study to identify long-term cointegrating correlations between variables. The findings demonstrate that government expenditure has a significant and positive long-term impact on economic growth, stressing the need of investing in ASEAN-wide economic and social development projects. However, the short-term effects of government spending appear to be minimal, owing to delays in collecting benefits from these expenditures.

Reference
  • 1. Afonso, A., & Furceri, D. (2008). Government size, composition, volatility and economic growth. European Journal of Political Economy, 24(3), 517-532.

    2. Aida, N., Palupi, W. A., & Husain, F. R. (2023). What is the role of tourism, foreign direct investment, and institutions in economic growth in ASEAN?. WSEAS Transactions on Environment and Development, 19, 571-581.

    3. Barro, R. J. (1990). Government spending in a simple model of endogenous growth. Journal of Political Economy, 98(5, Part 2), S103-S125.

    4. Barro, R. J. (1991). Economic growth in a cross section of countries. The Quarterly Journal of Economics, 106(2), 407-443.

    5. Blinder, A. S., & Solow, R. M. (1973). Does fiscal policy matter?. Journal of public economics, 2(4), 319-337.

    6. Durlauf, S. N., & Johnson, P. A. (1995). Multiple regimes and cross-country growth behaviour. Journal of Applied Econometrics, 10(4), 365-384.

    7. Easterly, W., & Rebelo, S. (1993). Fiscal policy and economic growth: An empirical investigation. Journal of Monetary Economics, 32(3), 417-458.

    8. Inthakesone, T., Tiengmany, S., Thinphaisonh, C., Yawdhacksa, V., & Xaisongkham, S. (2023). Government spending and exchange rate in ASEAN countries: Evidence from ARDL and Toda & Yamamoto approach. Research Journal of Finance and Accounting.

    9. Jones, C., & Temouri, Y. (2016). Government Spending on Infrastructure in ASEAN Countries: A Panel Data Analysis. Economics Bulletin, 36(3), 1821-1830.

    10. Joseph, F. I., Chinyere, A., Nwankwo, K. C., & Uchechi, U. (2023). Effect of Government Expenditure and Value Added Tax on Economic Growth in Nigeria. Asian Journal of Economics, Business and Accounting, 23(16), 25-40.

    11. Keynes, J. M. (1936). The General Theory of Employment, Interest, and Money. Macmillan.

    12. Khan, M. S., & Senhadji, A. S. (2000). Financial development and economic growth: An overview. IMF Working Paper, 00/209.

    13. Lee, S. G., & Brahmana, R. (2013). The impact of government spending on the economic growth of ASEAN countries. International Journal of Business and Society, 14(3), 384-399.

    14. Li, H., & Liu, Z. (2019). Financial development and economic growth in the Asia-Pacific region. Journal of Asian Economics, 62, 38-52.

    15. Mahardiyanto, A., Saleh, M., Fahorrazi, M., Arthasari, T., & Adeel, N. (2023). Nexus of Finacial Inclusion and Human Development as an Important Role in Economic Growth: Evidence from ASEAN Countries. International Journal of Islamic Business and Economics (IJIBEC), 7(1), 37-48.

    16. Mak, S., & Zhang, Y. (2015). The impact of government spending on economic growth: The case of Cambodia. Journal of Southeast Asian Economies, 32(2), 205-220.

    17. Nastiti, G., & Saepudin, T. (2023). Analisis Faktor-Faktor Yang Mempengaruhi Pertumbuhan Ekonomi Di Negara-Negara Asean Tahun 2010-2017. Brainy: Jurnal Riset Ekonomi dan Bisnis Mahasiswa, 4(1), 1-6.

    18. Ngigi, C. N., Goswami, A., Kapoor, H. S., & Jangir, R. K. (2023). Exploring the Role of Government Spending in Fostering Economic Development in Kenya.

    19. Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.

    20. Pessino, C., Altinok, N., & Chagalj, C. (2022). Allocative Efficiency of Government Spending for Growth in Latin American Countries.

    21. Rahman, M. A. (2023). The Impact of government expenditure on economic growth: A Study of SAARC countries. Available at SSRN 4344848.

    22. Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002-1037.

    23. Santanu, G., & Wardani, K. D. J. (2023). How government expenditures and economic growth works on labor absorption. World Journal of Advanced Research and Reviews, 18(3), 487-493.

    24. Saroj, S., Shastri, R. K., Singh, P., Tripathi, M. A., Dutta, S., & Chaubey, A. (2023). In what ways does human capital influence the relationship between financial development and economic growth?. Benchmarking: An International Journal, (ahead-of-print).

    25. Smith, P. J., Jones, L. A., & Brown, M. E. (2018). The impact of economic policy on growth in developing countries. Journal of Economic Studies, 45(3), 256-275.

    26. Sujidno, R., & Febriani, R. E. (2023). Pengaruh Korupsi, Pengeluaran Pemerintah dan Jumlah Uang Beredar (M2) Terhadap Pertumbuhan Ekonomi di ASEAN. Jurnal Sosial Ekonomi Dan Humaniora, 9(2), 205-220.

    27. Sujidno, R., & Febriani, R. E. (2023). Pengaruh Korupsi, Pengeluaran Pemerintah dan Jumlah Uang Beredar (M2) Terhadap Pertumbuhan Ekonomi di ASEAN. Jurnal Sosial Ekonomi Dan Humaniora, 9(2), 205-220.

    28. Suresh, A. K., Seth, B., Behera, S. R., & Rath, D. P. (2023). An empirical investigation of the relationship between government revenue, expenditure, and economic growth in selected EMEs. Economic Journal of Emerging Markets, 101-113.

    29. Tanzi, V., & Zee, H. H. (1997). Fiscal policy and long-run growth. IMF Staff Papers, 44(2), 179-209.

    30. Wahyudi, H. E. R. U., & Palupi, W. A. (2023). Corruption Mudhorot for Economic Growth in 7 ASEAN Countries. WSEAS Transactions on Systems, 22, 101-115.

    31. Wang, F., & Zhang, J. (2017). The impact of fiscal policy on economic growth in China. Journal of Chinese Economic and Business Studies, 15(3), 217-237.