An Econometrics Analysis of the Relationship between Real Gross Domestic Product and Different Sub-Expenditure Functions in Zambia (1999-2021)

This paper investigates the relationship between different types of government sub-expenditure functions and economic growth measured by Real Gross Domestic Product (GDP) in Zambia from 1999 to 2021. The study used the ARDL bounds -testing approach. The study is motivated by the dwindling economic growth reported by the Zambian Government over recent years, in the midst of ever increasing government expenditure. The ARDL bounds test showed that in the long run, social sector spending is positively correlated to economic growth, while spending on general public services and spending on economic affairs have no significant relationships with economic growth. In the short run, both social sector spending and spending on general public services contribute positively to economic growth. The study recommends that there is a need for government to prioritize spending in the social sector in order to attain economic growth as opposed to economic affairs expenditure which has no significant impact on economic growth. In practice, this will entail spending less on infrastructure projects and channeling funds to health education and social protection. In the short run, spending on both social sectors and general public services is critical for growth hence the sectors need to be prioritized.