GOVERNMENT ROAD SECTOR SPENDING AND its EFFECT ON ECONOMIC GROWTH IN ETHIOPIA

Abstract

effect on economic growth in Ethiopia using time series data for the period 1975-2018. Both descriptive and econometric analyses were used to analyze the data. The result of the descriptive analysis indicates that the trend of government road sector spending has highly increasing from time to time. Regarding the performance of road sector from 1974- 2018, the road network is by now growing out the rate. However the issue of rural accessibility still remains far from the desired level that the country needs to have. Thus, the country needs to do a lot to graduate to middle income country status in terms of road network expansion and improved accessibility. The Econometrics result, with the help of co integration and vector error correction analysis, the effect of government road spending on economic growth was assessed in the long-run as well as in the short-run. The findings reveal that government spending on road has a significant and positive effect on the economic growth (GDP) in the short-run and in the long-run. therefore, the government need to strengthen its support on road infrastructure through allocate more road financing to expand the road network with the aim of increasing the current rural accessibility, thus, improves the market access of the poor rural Population with the aim of improvement the current economic growth.