Revisiting Public Outlay Determinants in African Economies: Fresh Insight from Sustainability Perspectives

Abstract

The objective of this study centred on assessing the impact of sustainability in public outlay determination for 26 African countries. For robustness of analyses, the mean group (MG), feasible generalised least squares (FGLS), generalised linear mixed effects model (GLMM), and the novel method of moments quantile regression (MMQREG) techniques were employed on a dataset sourced between 1990 and 2022. Sustainability indicators were decomposed into economic, social, and environmental components. For the economic indicators, while inflation and revenue had adverse effects, the exchange rate accelerated government spending. The social measures demonstrated that urbanisation diminished public expenditure aside from the increasing impacts of human development and population growth. Similarly, the environmental indicators expressed that demand and supply of ecological resources adversely impacted public outlay in contrast to the enhancing effect of food production. Aggregating these effects suggests that, while the economic and environmental factors are mostly diminishing in impact, the social elements are more accelerating on real government spending. Nevertheless, the magnitude of these impacts varies with the existing size of government expenditure in African economies. Consequently, an encompassing rather than a selective preference for sustainability elements matters in government spending determination. JEL Classification: E62, O55, Q01.