Impact of Government Expenditure on Economic Growth: Focusing on Afghanistan's Agricultural Sector
Corresponding Author(s) : Waheedullah Hemat
Journal of Social Sciences & Humanities,
Vol. 2 No. 2 (2025): April
Abstract
Economic growth denotes to the steady upsurge in a country's real Gross Domestic Product (GDP) and is considered a key area for reducing poverty and achieving sustainable development. To support economic growth and long-term development, government expenditure should focus on engendering an enabling environment for private sector expansion and addressing market inefficiencies. In this context, the existing study examines the encouragement of government spending on economic growth, with particular attention to the agricultural sector in Afghanistan. For empirical analysis, the Augmented Dickey-Fuller (ADF) test, Johansen Co-integration test, and Ordinary Least Squares (OLS) method were employed. Results from the Johansen Co-integration test specify a long-term relationship among government agricultural expenditure, agricultural employment, the exchange rate, and economic growth in Afghanistan. Moreover, regression analysis outcomes show that government spending on agriculture significantly influences the country's economic growth, whereas employment in agriculture and the exchange rate do not have a statistically significant impact. Despite these findings, Afghanistan’s agricultural sector continues to face several challenges, such as a lack of highly educated workers, inadequate infrastructure, weak agricultural marketing systems, and limited irrigation facilities. Therefore, it is suggested that the Afghan government increase investment in the agriculture sector and ensure the efficient and transparent use of financial resources. Strengthening this sector would ultimately enhance agricultural productivity and foster economic growth across the country.
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- Iheanacho, E. (2017, September). Government Expenditure on Agriculture and Economic Growth: Cointegration and Causality Approach. Journal of Finance, Banking and Investment, 4, 14-28. Retrieved from www.absudbfjournals.com
- Maïga, A., Bamba, A., Sy, B., Keita, G. H., Mouleye, I. S., & Diallo, M. (2021). Analysis of the Effects of Public Expenditure on Agricultural Growth in Mali. Asian Journal of Agricultural Extension, Economics & Sociology, 42-50. https://doi.org/10.9734/AJAEES/2021/v39i730607 DOI: https://doi.org/10.9734/ajaees/2021/v39i730607
- Pawlak, K., & Kołodziejczak, M. (2020, July 7). The Role of Agriculture in Ensuring Food Security in Developing Countries: Considerations in the Context of the Problem of Sustainable Food Production. sustainability, 1-20. https://doi.org/https://doi.org/10.3390/su12135488 DOI: https://doi.org/10.3390/su12135488
- Saad , W., & Kalakech, K. (2009). The Nature of Government Expenditure and its Impact on Sustainable Economic Growth. Middle Eastern Finance and Economics, 39-47. Retrieved from https://www.researchgate.net/publication/255634788
- Selvaraj, K. N. (1993, December). IMPACT OF GOVERNMENT EXPENDITURE ON AGRICULTURE AND PERFORMANCE OF AGRICULTURAL SECTOR IN INDIA. The Bangladesh Journal of Agricultural Economics, 37-49.
- Yousufi, A. (2016). Horticulture in Afghanistan: Challenges and Opportunities. Journal of Developments in Sustainable Agriculture, 36-42.
- Bank, T. W. (2014). Islamic Republic of Afghanistan Agricultural Sector Review Revitalizing Agriculture for Economic Growth, Job Creation and Food Security . Washingtonx: The World Bank.
- Bank, T. W. (2022, April 1). The World Bank. Retrieved from www.worldbank.org/en/home.
- Bank, W. (2022, 6 1). THE WORLD BANK . Retrieved from World Development Indicators: https://databank.worldbank.org
- Basharpal, M., & Jali, M. M. (2015). The impact of the Union of Soviet Socialist Republics (USSR) occupation on Afghanistan politics and economy: An empirical study . Malaysian Journal of Society and Space, 125-137.
- Chandio, A. A., & A. R. (2016, September). Impact of Government Expenditure on Agricultural Sector and Economic Growth in Pakistan. International Journal of Advanced Biotechnology and Research (IJBR), 7, 1046-1053. Retrieved from https://www.researchgate.net/publication/309210938
- Dkhar, D. S., & De, U. K. (2018). Public expenditure on agriculture and economic growth:a case study of Meghalaya. Agricultural Economics Research Review, 271-279. https://doi.org/10.5958/0974-0279.2018.00044.7 DOI: https://doi.org/10.5958/0974-0279.2018.00044.7
- Domar. (1946). Capital Expansion, Rate of Growth, and Employment. Econometrica, 14, 137-147. Retrieved from https://www.jstor.org/stable/1905364 DOI: https://doi.org/10.2307/1905364
- FAO. (2018). 15 YEARS IN AFGHANISTAN A SPECIAL REPORT. Rome. Retrieved from http://www.fao.org/3/CA14336EN/ca1433en.pdf
- Gisore, N., Kiprop, S., Kalio, A., & Ochieng, J. (2014, November). EFFECT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN EAST AFRICA: A DISAGGREGATED MODEL. European Journal of Business and Social Sciences, 289-304. Retrieved from http://www.ejbss.com/recent.aspx-/
- Granger. (1969). Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica, 37, 424-438. https://doi.org/https://doi.org/10.2307/1912791 DOI: https://doi.org/10.2307/1912791
- Harrod. (1939). An Essay in Dynamic Theory. The Economic Journal, 14-33. Retrieved from https://www.jstor.org/stable/2225181 DOI: https://doi.org/10.2307/2225181
- Idoko, C. U., & Jatto, S. M. (2018). GOVERNMENT EXPENDITURE ON AGRICULTURE AND ECONOMIC GROWTH IN NIGERIA (1985-2015). International Journal of Academic Research and Reflection, 24-39. Retrieved from https://www.researchgate.net/publication/351904625
- Jamal, R. A., Seftarita, C., & Maipita, I. (2019). Economic Growth and Employment Agricultrual Sector on Poverty in Aceh Province. Jurnal Ekonomi, 18(1), 1-7. https://doi.org/ https://doi.org/10.23969/trikonomika.v18i1.1513 DOI: https://doi.org/10.23969/trikonomika.v18i1.1513
- Johansen. (1988). STATISTICAL ANALYSIS OF COINTEGRATION VECTORS. Journal of Economic Dynamics and Control, 231-254. DOI: https://doi.org/10.1016/0165-1889(88)90041-3
- Magdalena, S., & Suhatman, R. (2020). The Effect of Government Expenditures, Domestic Invesment,Foreign Invesment to the Economic Growth of Primary Sector in Central Kalimantan. Budapest International Research and Critics Institute-Journal (BIRCI-Journal), 3, 1692-1703. https://doi.org/https://doi.org/10.33258/birci.v3i3.1101 DOI: https://doi.org/10.33258/birci.v3i3.1101
- MAIL. (2022). Annual expenditure reports (Qatiya). Kabul: Ministry of Agriculture Irrigation and Livestock.
- Musaba, E., Chilonda, P., & Matchaya, G. (2013). Impact of Government Sectoral Expenditure on Economic Growth in Malawi, 1980-2007. Journal of Economics and Sustainable Development, 4, 71-78. Retrieved from http://www.iiste.org/Journals/
- Pingali , P. (2006). Agricultural Growth and Economic Development: a view through the globalization lens . Presidential Address to the 26th International Conference of Agricultural Economists (pp. 1-35). Gold Coast: FAO. DOI: https://doi.org/10.1111/j.1574-0862.2007.00231.x
- Praburaj, L. (2018, July). Role of Agriculture in the Economic Development of a Country. International Journal of Commerce, 1-5. https://doi.org/https://doi.org/10.5281/zenodo.1323056
- Sasmal, R., & Sasmal, J. (2016). Public expenditure, economic growth and poverty alleviation. International Journal of Socia Economics, 43, 604-618. https://doi.org/10.1108/IJSE-08-2014-0161 DOI: https://doi.org/10.1108/IJSE-08-2014-0161
- Tijani, A., Oluwasola, O., & Baruwa, O. (2015). Public sector expenditure in agriculture and economic growth in Nigeria: An empirical investigation. Agrekon, 76-92. https://doi.org/10.1080/03031853.2015.1073000 DOI: https://doi.org/10.1080/03031853.2015.1073000
References
Iheanacho, E. (2017, September). Government Expenditure on Agriculture and Economic Growth: Cointegration and Causality Approach. Journal of Finance, Banking and Investment, 4, 14-28. Retrieved from www.absudbfjournals.com
Maïga, A., Bamba, A., Sy, B., Keita, G. H., Mouleye, I. S., & Diallo, M. (2021). Analysis of the Effects of Public Expenditure on Agricultural Growth in Mali. Asian Journal of Agricultural Extension, Economics & Sociology, 42-50. https://doi.org/10.9734/AJAEES/2021/v39i730607 DOI: https://doi.org/10.9734/ajaees/2021/v39i730607
Pawlak, K., & Kołodziejczak, M. (2020, July 7). The Role of Agriculture in Ensuring Food Security in Developing Countries: Considerations in the Context of the Problem of Sustainable Food Production. sustainability, 1-20. https://doi.org/https://doi.org/10.3390/su12135488 DOI: https://doi.org/10.3390/su12135488
Saad , W., & Kalakech, K. (2009). The Nature of Government Expenditure and its Impact on Sustainable Economic Growth. Middle Eastern Finance and Economics, 39-47. Retrieved from https://www.researchgate.net/publication/255634788
Selvaraj, K. N. (1993, December). IMPACT OF GOVERNMENT EXPENDITURE ON AGRICULTURE AND PERFORMANCE OF AGRICULTURAL SECTOR IN INDIA. The Bangladesh Journal of Agricultural Economics, 37-49.
Yousufi, A. (2016). Horticulture in Afghanistan: Challenges and Opportunities. Journal of Developments in Sustainable Agriculture, 36-42.
Bank, T. W. (2014). Islamic Republic of Afghanistan Agricultural Sector Review Revitalizing Agriculture for Economic Growth, Job Creation and Food Security . Washingtonx: The World Bank.
Bank, T. W. (2022, April 1). The World Bank. Retrieved from www.worldbank.org/en/home.
Bank, W. (2022, 6 1). THE WORLD BANK . Retrieved from World Development Indicators: https://databank.worldbank.org
Basharpal, M., & Jali, M. M. (2015). The impact of the Union of Soviet Socialist Republics (USSR) occupation on Afghanistan politics and economy: An empirical study . Malaysian Journal of Society and Space, 125-137.
Chandio, A. A., & A. R. (2016, September). Impact of Government Expenditure on Agricultural Sector and Economic Growth in Pakistan. International Journal of Advanced Biotechnology and Research (IJBR), 7, 1046-1053. Retrieved from https://www.researchgate.net/publication/309210938
Dkhar, D. S., & De, U. K. (2018). Public expenditure on agriculture and economic growth:a case study of Meghalaya. Agricultural Economics Research Review, 271-279. https://doi.org/10.5958/0974-0279.2018.00044.7 DOI: https://doi.org/10.5958/0974-0279.2018.00044.7
Domar. (1946). Capital Expansion, Rate of Growth, and Employment. Econometrica, 14, 137-147. Retrieved from https://www.jstor.org/stable/1905364 DOI: https://doi.org/10.2307/1905364
FAO. (2018). 15 YEARS IN AFGHANISTAN A SPECIAL REPORT. Rome. Retrieved from http://www.fao.org/3/CA14336EN/ca1433en.pdf
Gisore, N., Kiprop, S., Kalio, A., & Ochieng, J. (2014, November). EFFECT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN EAST AFRICA: A DISAGGREGATED MODEL. European Journal of Business and Social Sciences, 289-304. Retrieved from http://www.ejbss.com/recent.aspx-/
Granger. (1969). Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica, 37, 424-438. https://doi.org/https://doi.org/10.2307/1912791 DOI: https://doi.org/10.2307/1912791
Harrod. (1939). An Essay in Dynamic Theory. The Economic Journal, 14-33. Retrieved from https://www.jstor.org/stable/2225181 DOI: https://doi.org/10.2307/2225181
Idoko, C. U., & Jatto, S. M. (2018). GOVERNMENT EXPENDITURE ON AGRICULTURE AND ECONOMIC GROWTH IN NIGERIA (1985-2015). International Journal of Academic Research and Reflection, 24-39. Retrieved from https://www.researchgate.net/publication/351904625
Jamal, R. A., Seftarita, C., & Maipita, I. (2019). Economic Growth and Employment Agricultrual Sector on Poverty in Aceh Province. Jurnal Ekonomi, 18(1), 1-7. https://doi.org/ https://doi.org/10.23969/trikonomika.v18i1.1513 DOI: https://doi.org/10.23969/trikonomika.v18i1.1513
Johansen. (1988). STATISTICAL ANALYSIS OF COINTEGRATION VECTORS. Journal of Economic Dynamics and Control, 231-254. DOI: https://doi.org/10.1016/0165-1889(88)90041-3
Magdalena, S., & Suhatman, R. (2020). The Effect of Government Expenditures, Domestic Invesment,Foreign Invesment to the Economic Growth of Primary Sector in Central Kalimantan. Budapest International Research and Critics Institute-Journal (BIRCI-Journal), 3, 1692-1703. https://doi.org/https://doi.org/10.33258/birci.v3i3.1101 DOI: https://doi.org/10.33258/birci.v3i3.1101
MAIL. (2022). Annual expenditure reports (Qatiya). Kabul: Ministry of Agriculture Irrigation and Livestock.
Musaba, E., Chilonda, P., & Matchaya, G. (2013). Impact of Government Sectoral Expenditure on Economic Growth in Malawi, 1980-2007. Journal of Economics and Sustainable Development, 4, 71-78. Retrieved from http://www.iiste.org/Journals/
Pingali , P. (2006). Agricultural Growth and Economic Development: a view through the globalization lens . Presidential Address to the 26th International Conference of Agricultural Economists (pp. 1-35). Gold Coast: FAO. DOI: https://doi.org/10.1111/j.1574-0862.2007.00231.x
Praburaj, L. (2018, July). Role of Agriculture in the Economic Development of a Country. International Journal of Commerce, 1-5. https://doi.org/https://doi.org/10.5281/zenodo.1323056
Sasmal, R., & Sasmal, J. (2016). Public expenditure, economic growth and poverty alleviation. International Journal of Socia Economics, 43, 604-618. https://doi.org/10.1108/IJSE-08-2014-0161 DOI: https://doi.org/10.1108/IJSE-08-2014-0161
Tijani, A., Oluwasola, O., & Baruwa, O. (2015). Public sector expenditure in agriculture and economic growth in Nigeria: An empirical investigation. Agrekon, 76-92. https://doi.org/10.1080/03031853.2015.1073000 DOI: https://doi.org/10.1080/03031853.2015.1073000