Trade liberalisation, government expenditure and economic growth in Egypt

• Published in: The Journal of development studies Vol. 36; no. 4; pp. 38 - 54
• Main Authors: Morley, Bruce, Perdikis, Nicholas
• Format: Journal Article
• Language: English
• Published: London Taylor & Francis Group 01.04.2000; Taylor and Francis Journals; F. Cass; Taylor & Francis Ltd
• Series: The Journal of Development Studies
• Subjects: Budget deficits; Budgets; Economic growth; Economic policy; Egypt; Error correction & detection; Expenditures; Exports; GDP; Government spending; Gross Domestic Product; Hypotheses; Influence; International trade; Investment; Labour supply; Liberalization; Macroeconomics; Public expenditure; Public finance; Public sector; Reforms; Relationship; Subsidies; Trade; Trade liberalization; Egypt
• ISSN: 0022-0388; 1743-9140
• DOI: 10.1080/00220380008422636

This article investigates the combined effects of growth in government expenditure, exports, investment and labour supply on economic growth in Egypt between 1955 and 1996. Using cointegration and error correction models, the article finds a long-run relationship between the variables, but less evidence of one in the short run. To account for the important policy reforms in 1974 and 1991, dummy variables are added which show the reforms have significantly affected the relationship between government expenditure and growth in a positive direction, but have had a negative effect on exports and growth. This conclusion is further supported by the time-varying coefficient analysis.