Government Spending and Industrial Sector Performance in Algeria: Using the ARDL Approach

The study aimed to investigate the impact of government spending on Algeria's industrial sector during the period from 1995 to 2022, with a focus on its effect on the dependent variable. To achieve this, competitive industrial performance was used as an indicator to measure the sector's performance. Additionally, independent variables such as inflation, international oil prices, GDP, and the growth of non-hydrocarbon exports were analysed. The study employed the Auto-Regressive Distributed Lag (ARDL) model to conduct the economic analysis, considering the slow time lags of these variables. The study concluded that there was a positive short-term relationship between government spending and competitive industrial performance in the first year. However, it turned into an inverse relationship in the following year and became insignificant by the third year. In the long term, the study found a significant positive impact of government spending on competitive industrial performance. Additionally, the study identified a significant positive relationship between oil prices and competitive industrial performance, while both inflation and non-hydrocarbon export growth had a significant inverse relationship with competitive industrial performance. The study also found no significant relationship between GDP and competitive industrial performance.