Read Online

Download PDF (EN)

Abstract

Despite recurrent attempts at fiscal measures and an increasingly large role for government expenditures, Sub-Saharan Africa continues to face a persistent quality-of-life problem. This article explores the impact of public expenditure on quality of life in Sub-Saharan African countries, where quality of life is measured using the Human Development Index. The research is justified because public expenditure plays an important role in facilitating economic and political processes, such as the provision of education, health, infrastructure, and security, which can bring about better welfare outcomes. However, Sub-Saharan Africa has remained a poor region characterised by insufficient infrastructure, insecurity, high unemployment, and unstable human development. The study was guided by Keynes' theory of public expenditure and was supplemented by Wagner's law and the displacement hypothesis by Peacock and Wiseman. It postulated that when public expenditures are used productively and effectively, they enhance the quality of life in Sub-Saharan Africa. Panel secondary data from Sub-Saharan African countries between 2005 and 2024 were utilized in conducting the analysis. Quality of life is the dependent variable, and total government expenditure is the independent variable. The control variables in the analysis include domestic debt, external debt, inflation, and exchange rate. To conduct the analysis, descriptive statistics, panel unit root test, Kao residual cointegration test, correlated random effects Hausman test, panel GMM-EGLS random effects estimation, Granger causality test, and diagnostic tests were conducted. The findings indicated that there has been a slight improvement in quality of life, while public expenditure in Sub-Saharan Africa has increased over the years under consideration. The Kao test confirmed the presence of a long-run relationship between quality of life, public expenditure, and control variables. The GMM estimation indicated that total government expenditure positively affects quality of life. Domestic debts and inflation have negative impacts, whereas external debt and exchange rates affect welfare outcomes differently. Causality analysis showed that the quality-of-life Granger-causes public expenditure.