The developmental role of public spending: Libyan economy case study during the period (1990-2014)

Ramadhan Mohamed Al-Tebawi / Ashraf Al-Dhahir Mashina

The study aims to examine the causal relationship between public spending and GDP in Libya during the period (1990-2014). It relied on the analytical descriptive approach and econometric models using the co-integration test and error correction model. The study concluded that changes in public spending adjust at a rate of 53% per year due to short-term GDP deviations from long-term equilibrium. The increase in public expenditure is mainly driven by current spending and administrative burdens. The paper recommends restructuring current spending and prioritizing investment in flexible productive sectors.

Economic Growth / Public Spending / Co-integration / Causality Test