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Affiliation(s)

Saudi Electronic University, Jeddah, Saudi Arabia
University Tunis El Manar, El Manar University Campus, Tunis, Tunisia

ABSTRACT

In this paper, we first examine the impact of governance quality on public expenditure efficiency. Then, we try to determine the effect of these expenditures on economic growth. Our starting point is the idea that public expenditure efficiency of a government program is significantly affected by the country’s governance quality. In other words, changes in government expenditure and the returns they generate on a government program depend on governance quality. Our sample consists of 36 countries observed over the 1996 to 2020 period. This period is known by a significant transition of political regimes. Our research model links government expenditure with the returns generated in a country in a given sector. In this model, we introduce the governance variable to examine the impact of government expenditure on returns on a government program in terms of schooling rates and life expectancy. The results indicate that governance quality affects expenditure structure and that efficiency of this expenditure positively correlates with a better governance quality as measured by corruption control and government efficiency. We also found that efficient expenditure has a positive impact on economic growth.

KEYWORDS

governance quality, public expenditure returns, efficiency, economic growth, dynamic GMM, DEA

Cite this paper

Journal of Modern Accounting and Auditing, May 2022, Vol. 18, No. 5, 193-211, doi: 10.17265/1548-6583/2022.05.001.

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