ABSTRACT
This study analysed the trends in government spending, trade openness, and economic growth; to determine the long-term co-integration relationship; and to investigate the nature of shock transmission processes among these variables. The objective was to assess the dynamic relationship between government spending, trade openness, and economic growth across selected Sub-Saharan African countries from 1980 to 2023. Descriptive statistics, including mean, median, variance, and standard deviation, were used to summarise the variables of the studies. Unit-root tests (Levin, Lin & Chu and Im, Pesaran, and Shin) were conducted to assess the stationarity of these variables, while co-integration tests (Pedroni and Kao residual co-integration) were applied to examine long-term relationships among them. To analyse shock transmission processes, VAR estimation, impulse response functions, and variance decomposition methods were employed. The results indicated that economic growth and government spending followed similar upward and downward trends, while trade openness showed significant fluctuations. The findings confirmed a long-term relationship among government spending, trade openness, and economic growth. The
study further revealed that, except for the response of economic growth to government spending and the response of trade openness to innovations in government spending, economic growth generally responded positively to innovations in other endogenous variables. Based on these findings, the study recommends channeling government spending toward capital expenditure, education, and efficient record-keeping to strengthen its positive impact on economic growth.
