Public Spending and Economic Growth in the Post-Conflict Economy of South Sudan

This study investigates the relationship between disaggregated public expenditure components and economic growth from 2011 to 2025 in South Sudan. The motivation for this study was inspired by the persistent South Sudan economy underperformance despite the substantial oil revenue associated with fiscal policy structural imbalance, where recurrent expenditure consistently dominates capital expenditure investment. The aim was to evaluate and analyze the performance as well as the contribution of disaggregated public expenditure components on the economic growth in the fragile economic state for more focus policy guide and directions. The study employed the use of Ordinary Least Squares Model where total government spending is separated into recurrent and capital components while changes in crude oil revenue and severity of conflict are moderating variables. The results reveal that recurrent expenditure had a significantly negative effect on real GDP growth, with an estimated coefficient of about –0.42 (p < 0.05), indicating that increases in wage bills, military spending, and administrative consumption directly suppressed productive investment and constrained overall growth performance. Capital expenditure, although positively associated with economic growth, produced a statistically insignificant coefficient of approximately 0.28 (p > 0.10). This outcome reflects persistent implementation bottlenecks, weak project execution, conflict-related disruptions, and limited absorptive capacity within public institutions. Oil revenue changes had a strikingly strong and positive effect on growth, with a coefficient near 0.65 (p < 0.01), reinforcing the centrality of oil to South Sudan’s economic fluctuations and exposing the vulnerability of a resource-dependent system. The conflict index also demonstrated a large and significant negative effect on growth, with an estimated coefficient around –10.12 (p < 0.05), showing that stability is indispensable for productive activity. Overall, the study concludes that the composition of expenditure, rather than its total magnitude, drives growth outcomes in fragile rentier economies and recommends reallocating spending toward productive capital formation, strengthening public financial management, and expanding non-oil revenue to support sustainable, resilient growth.