Government Spending and Economic Growth: A Case Study of Myanmar

Volume : IEJ Vol.3 No.(1)

Published Date : June 2024


Every government must allocate the budget as the expenditure on various sectors in the particular country for the development of it. According to Keynesian economics, if the government spending rises while all other spending components stay constant, output will increase. However, Wagner's law shows that increased government spending is likely to harm economic growth. Sethi (2016) discovers a long-run relationship between economic growth and government spending, as well as unidirectional causality from government spending to economic growth. The purpose of this research is to determine the trends in the growth rate of government spending and GDP from 2011 to 2023, as well as to analyse the relationship between government spending and economic growth in Myanmar (2011-2023). The data used in this study are from secondary sources such as the World Bank, the Ministry of Planning and Finance of Myanmar’s website, other Myanmar Government websites, and previous studies. Different types of analysis are used to obtain scientific results, including correlation, regression, and the Granger Causality Test. The findings show that there is a rejection of the unit root for Government spending (Expenditure) at level but Economic Growth (GDP) at first difference. And there is a positive correlation between Economic Growth (GDP) and Government Spending (Expenditure) in Myanmar. And Government spending (Expenditure) granger cause Economic Growth (GDP) of Myanmar but Economic Growth (GDP) does not granger cause Government spending (Expenditure) at 5% level of significance.