Government Expenditure and Economic Growth in Zimbabwe

Since 1980, the Zimbabwean economy has not performed well, characterised by averagely declining levels of growth and often recording negative economic growth in some years. Various explanations have been provided by different scholars including statism (Midgely, 1987; Gilman, 2006), excessive government spending (Fan and Rao, 2003), poor economic governance and a series of 'wrong' policy choices (Gilpin, 2008). The study focused on determining the resource allocation to the three sectors of the economy (safety and security, social and economic), as well as analysing the nature of the spending between operational and capital investment. The study found that declining capital investment, huge defence budget and transfer payments, were among factors that reduced the influence of government expenditure in driving economic growth in Zimbabwe. Key recommendations included budgetary reforms aimed at reducing large defence spending and size of the public sector, and direct limited fiscal resources towards the economic sector through capital investment, human capital development and knowledge processes as the imperatives for sustainable long-term growth.