The impact of government spending on agricultural growth: a case of Zambia, Malawi, South Africa and Tanzania

Jambo, Newettie (2017-03)

Thesis (MScAgric)--Stellenbosch University, 2017.

Thesis

ENGLISH SUMMARY : The objective of this study is to determine the component of public expenditure that is more growth enhancing for the agricultural sector. In order to address this objective, an analysis is conducted on government spending, disaggregated by expenditure categories for Zambia, Malawi, South Africa and Tanzania between 2000 and 2014. The vector error correction model (VECM) is used to test the impact of public expenditure, private investment and net trade on agricultural GDP growth. The results from the empirical analysis reveal that agricultural growth responds differently to the agricultural spending types across the countries. In Zambia, the bulk of public expenditure goes to support the input subsidy programs (ISPs) and price support programs (PSPs). However, the empirical analysis indicated that infrastructure development, which only received third priority, was more growth enhancing among the spending types. Results also suggested a negative relationship between agricultural growth and expenditures on ISPs, PSPs and agricultural research in Zambia. In the case of Malawi, the results of the empirical analysis indicated that spending on agricultural research has a higher impact on growth, and unlike Zambia there is evidence of a positive relationship between agricultural growth and spending on PSPs. While infrastructure development in Tanzania received the bulk of the budget, the regression results indicated a negative relationship between spending on infrastructure and long-run economic growth. In contrast, South Africa allocates public expenditure to spending categories with the highest returns. For instance, priority is given to agricultural research in South Africa. Given the study results, there is a need to re-direct public investments in favor of growth-enhancing expenditure categories. The recommendation is for governments to shift their spending priorities and focus more on areas that stimulate growth to the sector. More efficient targeting of public investments by the governments stimulate growth in the agricultural sector and ultimately reduce poverty and hunger within the sub-Saharan region. This information is also vital to various international bodies including African Union (AU) and United Nations (UN) aiming to achieve goals like the Malabo declaration by 2025 and Sustainable development goals (SDGs) by 2030, respectively.

AFRIKAANSE OPSOMMING : Die doel van hierdie studie is om vas te stel watter komponent van openbare besteding meer groei bevorder vir die landbousektor. Ten einde hierdie doelwit aan te spreek, is 'n ontleding gedoen op regeringbesteding, ingedeel volgens bestedingskategoriee vir Zambie, Malawi, Suid-Afrika en Tanzanie tussen 2000 en 2014. Die vektor foutkorreksie model (VECM) word gebruik om te toets wat die impak van openbare besteding, private investering en die handelsbalans op landbou se groei in BBP is. Die resultate van die empiriese ontleding dui daarop dat landbou groei verskillend reageer op die tipes landbou-uitgawes in die verskillende lande. In Zambie gaan die grootste deel van openbare besteding ter ondersteuning van die insette subsidie programme (ISPs) en die prys ondersteuningsprogramme (PSPs). Maar die empiriese ontleding het aangedui dat die ontwikkeling van infrastruktuur, wat net derde prioriteit was, het meer groei aangemoedig as die ander tipes uitgawes. Resultate het ook daarop gedui dat daar 'n negatiewe verhouding is tussen landbou groei en besteding op ISPs, PSPs en landbounavorsing in Zambie. In die geval van Malawi, het die resultate van die empiriese ontleding aangedui dat besteding aan landbounavorsing 'n groter impak het op groei en, in teenstelling met Zambie, is daar 'n bewys van 'n positiewe verhouding tussen landbou groei en besteding op PSP. Terwyl die ontwikkeling van infrastruktuur in Tanzanie die grootste deel van die begroting ontvang, het die regressie resultate getoon dat 'n negatiewe verhouding tussen infrastruktuurbesteding en langtermyn ekonomiese groei bestaan. In teenstelling hiermee, het Suid-Afrika openbare besteding toegeken aan uitgawe kategoriee met die hoogste opbrengs. Byvoorbeeld, prioriteit is gegee aan landbounavorsing in Suid-Afrika. Gegewe die studie resultate, is daar 'n behoefte om direkte openbare investering te kanaliseer ten gunste van bestedingskategoriee wat groei verbeter. Die aanbeveling vir regerings is om hul bestedingsprioriteite te verskuif en meer te fokus op areas wat groei in die sektor stimuleer. Deur openbare investering meer doeltreffend aan te wend kan regerings groei in die landbousektor stimuleer en uiteindelik armoede en hongerte binne die sub-Sahara-streek verminder. Hierdie inligting is ook noodsaaklik vir verskeie internasionale liggame insluitend die Afrika-Unie (AU) en die Verenigde Nasies (VN) wat ten doel het om doelwitte soos die Malabo verklaring teen 2025 te bereik en die volhoubare ontwikkeling doelwitte (SDGs) teen 2030.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/101022
This item appears in the following collections: