Impact of Government Expenditures on Economic Growth in Zanzibar

The objective of this study was toassess the impact of various government expenditures on the economic growth in Zanzibar. All data used were from the Ministry of Finance of Zanzibar. The study was a case study by design and quantitative in approach. Data were collected through secondary sources by use of Documentary review. This impact of government expenditures on economic growth was explained by econometric analysis of the data used in the study. Although the rate of growth of expenditure as a ratio of GDP has been increasing consistently over time, its absolute per capita magnitude is too low, thus, there is a need to increase government expenditure and to effectively and efficiently utilize it in a way it will hasten economic growth. The need for increasing government expenditure is also evident in an effort towards achieving the Millennium Development Goals (MDGs). This calls for, in general, non distortionary and reliable source of revenue, capacity building, and preventing the expenditures that can be efficiently provided by private sector. Simple OLS single-factor regression models were employed in analyzing the effect of government expenditure on economic growth. The models regressed both total government development expenditure and government recurrent expenditure of the selected sectors with the Gross domestic product (GDP) based on Purchasing Power Parity, i.e. per capita GDP