(The) impact of government expenditure components on economic growth in Myanmar

Abstract

The main objective of this study is to investigate the impact of government expenditure components on economic in Myanmar. We examined three sectoral government expenditures, education, health and military by using annual time series data over a period from 1980 to 2015. Augmented Dickey-Fuller Test was applied to test unit root. In order to check short-run and long-run relationships, this study employed Autoregressive Distributed Lag (ARDL) Approach. ARDL bounds test depicts long-run relationship among the government expenditure components and economic growth in Myanmar. In the long-run, education expenditure has positive and significant impact on economic growth. Health and defense expenditure have negative impact on economic growth. But health expenditure is not statistically significant while defense expenditure is highly significant. Short-run result shows that there exists causality running from all expenditure components to economic growth. Therefore, Myanmar needs to shift the government expenditure from the unproductive sector, military sector, to the productive sector, education sector. Moreover, there is a need to find out the proper budget allocation scheme for health sector in order to contribute to economic growth.