Examining Government Spending and Its Impact on Economic Growth in Sierra Leone: Spotlight on Human Capital and Military Expenditure

The discussion surrounding the government's role in fostering economic growth has been extensively explored in economic literature, yet it remains relatively unexplored within the context of Sierra Leone. Government expenditure continues to rise due partly to the high demand for public goods like roads, communication, power, education and health, as well as the increasing need to provide both internal and external security for the citizenry and the nation. However, despite significant increases in government spending on education, health and defense, economic growth has remained sluggish, leaving many Sierra Leoneans entrenched in poverty. Thus, this research investigates the relationship between various aspects of government spending and economic expansion in post-war Sierra Leone, focusing specifically on investment in human capital and military expenditures. Employing an ARDL estimation methodology with quarterly time series data for the period 2000Q1 to 2020Q4, the study reveals that military spending positively influence long-run economic growth. However, spending on human capital is identified as having a dampening effect on growth over the long run. In the short term, government expenditure on human capital and defense demonstrates a negative impact on economic growth while their lagged effect reveals a positive association with economic growth. These findings reveal the need for strategic policy interventions to optimize governmental expenditure in Sierra Leone. Policymakers are encouraged to prioritize targeted investments in education, healthcare, and skills enhancement to foster sustained economic growth.