Impact of Government Expenditure on Economic Growth: Focusing on Afghanistan's Agricultural Sector

Economic growth denotes to the steady upsurge in a country's real Gross Domestic Product (GDP) and is considered a key area for reducing poverty and achieving sustainable development. To support economic growth and long-term development, government expenditure should focus on engendering an enabling environment for private sector expansion and addressing market inefficiencies. In this context, the existing study examines the encouragement of government spending on economic growth, with particular attention to the agricultural sector in Afghanistan. For empirical analysis, the Augmented Dickey-Fuller (ADF) test, Johansen Co-integration test, and Ordinary Least Squares (OLS) method were employed. Results from the Johansen Co-integration test specify a long-term relationship among government agricultural expenditure, agricultural employment, the exchange rate, and economic growth in Afghanistan. Moreover, regression analysis outcomes show that government spending on agriculture significantly influences the country's economic growth, whereas employment in agriculture and the exchange rate do not have a statistically significant impact. Despite these findings, Afghanistan’s agricultural sector continues to face several challenges, such as a lack of highly educated workers, inadequate infrastructure, weak agricultural marketing systems, and limited irrigation facilities. Therefore, it is suggested that the Afghan government increase investment in the agriculture sector and ensure the efficient and transparent use of financial resources. Strengthening this sector would ultimately enhance agricultural productivity and foster economic growth across the country.