EFFECTIVENESS OF DEVELOPMENT EXPENDITURES AND NON-DEVELOPMENT EXPENDITURES ON ECONOMIC GROWTH

Author(s) : Noman Riaz & Guoyong Wu

Abstract:

This study explores the effectiveness of non-development and development expenditure's impact on economic growth. The researcher used gross domestic product growth as the proxy of economic growth, military expenditures that indicate the non-developmental expenditures, developmental expenditure, total expenditure by government and gross domestic savings. Time series data have been used from 1988 to 2020 in this study and the target country has Pakistan. In this paper, the Auto-Regressive Distribution Lag Model has been estimated to check the effectiveness and long-run relationship. The main findings suggest that a long-run relationship exists between non-development expenditure, development expenditure and economic growth. Development expenditure, non-development expenditure and savings have a positive and increasing impact on the economic growth of Pakistan. So, in Pakistan development expenditure and non-development expenditure both are equally important for economic growth.