Abstract

• This study analyzes the effects of economic and social expenditure on economic growth in Myanmar and formulates an appropriate policy implication for improving the limited financial resources in order to achieve economic growth in Myanmar. Using secondary data covering the period 1980 to 2014, the study applies the Economic Analysis of Time Series and the Dynamic Model of ARDL (Auto Regressive Distributed Lag Model) as the main analytical tools to investigate the effect of public expenditure on economic growth. Several notable findings are obtained from this study. Firstly, the result reveals that all expenditure components and economic growth are co-integrated and they establish a long run equilibrium relationship. Secondly, this study finds that, the economic expenditure such as spending on agriculture, infrastructure, and spending on processing and manufacturing sectors properly achieved the outcomes of economic growth in the short run thereby boosting the larger impact on the long run economic growth. In the third, this study discovers that social spending such as spending on health sector significantly contributes to promoting on economic growth not only in the short run but also in the long- run. On the other hand, spending on education does not capable to generate the direct effect on improving productivity and more than that, it does not contribute to the long run effect on economic growth. Based on these findings, the study provides for the policy implications that spending allocation should be more concentrated on the direct productive activities than indirect productive activities. Besides, spending allocation should be based on efficiency and effectiveness in allocation process. Moreover, a well-defined expenditure policy that pursued effective management of resources in the development process is needed to consider. Finally, it should be ensured budgeting in term of the coordination between the development plan objectives and the budgetary process.