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THE UNIVERSITY OF NAIROBI
SCHOOL SCHOOL OF ECONOMICS
DEPARTMENT ECONOMICS
COURSE NAME: ADVANCED MACROECONOMIC THEORY I
COURSE CODE XET503
ANALYTICAL PAPER ON IMPACT OF FOREIGN AID ON GOVERNMENT PUBLIC SPENDING IN
KENYA
PRESENTED BY: MARWANGA JACKON OBARE X50/60!/"0##
TO : DR$ SETH GOR
#5THNOVEMBER% "0##
ABSTRACT
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Foreign aid represents an important source of finance in most countries in Africa countries, where it
supplements low savings, narrow export earnings and thin tax bases. In recent years the donor
community has become more stringent about fiscal discipline and good policies, which has led to
freezing of donor funds to governments that do not conform with aid conditionalities. The Kenyan
government has experienced such aid cuts in the past and this paper uses a welfare utility maximization
function to explore how government expenditure responds to fluctuations in aid flows. The empirical
results indicate that the flow of foreign aid does influence government spending patterns. There is a
positive and statistically significant relationship between the share of government expenditure in gross
domestic product !"#$ and the share of net disbursement of overseas development assistance %"A$.
The study found out that foreign aid has a positve impact on the growth of the economies when there ae
sound macroeconomic policies, its absence also creates economic stagnation of most African
economies.
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Table of Contents
1.0 Background ....................................................................................................................5
1.4 Research issue................................................................................................................. 7
2.0 Literature review..............................................................................................................8
2.2 Analytical model..............................................................................................................11
2.3 Empirical data................................................................................................................. 12
2.4 Conclusion and policy implication..
.15
References
.16
Appendices
.18
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ABBREVIATIONS
DAC "evelopment Assistance &ommittee
GDP !ross "omestic #roduct
IMF International 'onetary Fund
ODA %verseas "evelopment Assistance
OECD %rganization for (conomic &ooperation and "evelopment
OLS %rdinary )east *+uare
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#$0 B&'()*+,-.
Foreign aid is the international transfer of capital, goods, or services from a country or international
organization for the benefit of the recipient country or its population. Aid can be economic, military, or
emergency humanitarian e.g., aid given following natural disasters$.
Foreign aid is an important source of finance to a maority of developing countries since it supports the
budgetary process and therefore enhances the development of these countries, Atemn-eng . T.
/001$. The role of foreign aid in the growth process of developing countries has been a topic of intense
debate. Foreign aid is an important theme given its implications on poverty reduction in developing
countries. #revious empirical studies on foreign aid and economic growth generate mixed results. For
example, #apane- 2345$, "owling and 6iemenz 237/$, !upta and Islam 2375$, 6ansen and Tarp
/000$, 8urnside and "ollar /000$, !omanee, et al. /005$, "algaard et al. /009$, and Karras /001$,
find evidence for positive impact of foreign aid on growth: 8urnside and "ollar /000$ and 8rautigam
and Knac- /009$ find evidence for negative impact of foreign aid and growth, while 'osley 2370$,
'osley, et al. 2374$, 8oone 2331$, and ensen and #aldam /005$ find evidence to suggest that aid
has no impact on growth. It should be noted that, although 8urnside and "ollar /000$ concluded that
foreign aid has positive effects, this conclusion applies only to economies in which it is combined with
good fiscal, monetary, and trade policies, (-anaya-e. (. './007$
The main role of foreign aid in stimulating economic growth is to supplement domestic sources of
finance such as savings, thus increasing the amount of investment and capital stoc-. As 'orrissey
/002$ points out, there are a number of mechanisms through which aid can contribute to economic
growth, including a$ aid increases investment, in physical and human capital: b$ aid increases the
capacity to import capital goods or technology: c$ aid does not have indirect effects that reduce
investment or savings rates: and aid is associated with technology transfer that increases the
productivity of capital and promotes endogenous technical change.
According to 'c!illivray, et al. /001$, four main alternative views on the effectiveness of aid have
been suggested, namely, a$ aid has decreasing returns, b$ aid effectiveness is influenced by external
and climatic conditions, c$ aid effectiveness is influenced by political conditions, and d$ aid
effectiveness depends on institutional +uality. It is interesting to note that in recent years there has been
a significant increase in aid flows to developing countries although other types of flows such as foreign
direct investment and other private flows are declining. For example, according to the %rganization for
(conomic &orporation and "evelopment %(&", /003b$, foreign direct investment and other private
flows are on the decline, and remittances are expected to drop significantly in /003. 8udgets of many
developing countries were hit hard by the rises in food and oil prices in the last two years. 'any
5
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countries are not in a strong fiscal position to address the current financial crisis. According to the
%(&" /003b$, in /007, total net official development assistance %"A$ from members of the %(&";s
"evelopment Assistance &ommittee "A&$ rose by 20./< in real terms to =*>223.7 billion and is
expected to rise to =*>250 billion by /020. Africa is the largest recipient of foreign aid see Table 2$.
For example, net bilateral %"A from "A& donors to Africa in /007 totaled =*>/1 billion, of which
=*>//.? billion went to sub@*aharan Africa. (xcluding volatile debt relief grants, bilateral aid to Africa
and sub@*aharan Africa rose by 20.1< and 20< respectively in real terms (-anaya-e. (. './007$
#$#$ KENYAS RECORD ON ECONOMIC GROWTH
Kenya gained independence in 2315 and rapidly became the most economically successful and politically
stable country in (ast Africa orld 8an-, /005$. 6owever, during the last two decades,
Kenya;s economic growth performance has been disappointing and as a result poverty has increased.
There are several reasons for the underperformanceBpoor governance, slow and incomplete economic
reforms, low investment, poor public services delivery, underinvestment in infrastructure, corruption, and a
wea- udiciary I'F, /005$. In the past few years, the rising incidence of 6ICDAI"*, the deteriorating
security situation, and political uncertainty have also detracted from growth.
#$" E'+-+1' G*+24 #0"000
8etween 2340 and /000, Kenyan real gross domestic product !"#$ growth was 9.1 percent per year andreal per capita income grew by an average of 2.5 percent annually. 6owever, these numbers mas- the
uneven pace of economic expansion in Kenya over this period.
#$3 #07: R&81. E'+-+1' G*+24 1- A99 S'+*7
The Kenyan economy grew rapidly in the period immediately following independence, and this growth
persisted into the 2340s, when growth averaged 4.7 percent per year. The agricultural sector grew at
roughly 1 percent per year, while the industrial and service sectors expanded by an average of 22 and 7
percent, respectively, each year. As a result, per capita incomes also grew rapidly at an annual rate of 9.5
percent orld 8an-, /009b$.
This growth was in large part driven by rapid expansion in the agricultural sector, activist fiscal policies, and
the import substitution industrialization I*I$ strategy pursued by the !overnment of Kenya !overnment$.
"uring this period, the !overnment pursued a monetary policy that -ept inflation low and attempted to
reduce its reliance on foreign aid. Fiscal policy was cautious and serious efforts were made to -eep budget
deficits at sustainable levels I-iara et al., /009$. The import substitution strategy led to industrial
diversification and growth by protecting domestic firms against international competition E#(", /009$. The
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main instruments used to pursue the import substitution strategy were an overvalued exchange rate, import
tariffs and +uantitative restrictions, foreign exchange controls, and import licensing I-iara et al., /009$.
Toward the end of the 2340s, Kenya;s economic performance began to deteriorate as a result of several
factors. These included the collapse of the (ast African &ommunity in 2344: the erosion of fiscal prudence,
partly due to the windfall from the boom in coffee prices: the second oil shoc- in 2344: and the anti@export
bias of the import substitution strategy I-iara et al., /009$. 'ore generally, the inefficiencies resulting from
the distortions introduced by import substitution policies increasingly outweighed the gains in growth from
the stimulation of domestic production.
According to (-anaya-e. (. './007$, the impact of foreign aid has been the subect of very extensive
investigation. The -ey +uestion that both the donor and the recipient countries +uestion is whether aid
has any effect on developing countries; growth and their level of poverty. This issue has beenapproached from various perspectives: nevertheless, a single and definite answer still does not exist.
Therefore, it is important to note that not only factors such as the amount and type of financial aid
impact the effectiveness of available funds but also the appropriate use of these funds by the receiving
country plays a vital role.
#$; RESEARCH ISSUE
According to eru, /005$,Kenya, li-e other developing countries, faces huge external debts and is
crying out for debt relief. 'ost countries argue that given their current poverty levels, the repayment and
servicing costs of external debts are too high and unmanageable. These claims have led to the
reconsideration of issues related to the effectiveness of aid in developing countries. (arlier the aid@
savings debate focused on the two@gap model developed by &henery and *trout 2311$ that set foreign
aid as an engine of growth. &ritics of this model have argued that foreign aid substitutes domestic
resources through declined savings, reduced government tax revenue and increased governmentconsumption. ith the renewal of the debate, the +uestion remains as to whether external assistance
complements or substitutes available domestic resources. In Kenya, the answer to this +uestion is
complicated by the fact that aid flow has not been consistent. !iven Kenya;s high dependence on
foreign aid, coupled with maor aid freeze episodes, there is need to analyse the impact of aid flows on
the budget process by establishing the lin- between aid and public expenditure. A stronger association
of aid with higher government consumption rather than with public investment would suggest both a
Gflypaper effectH and fungibility. This may imply that aid recipient governments view foreign aid li-e anyother source of revenue and conse+uently use it for increased consumption, tax reductions or reduced
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fiscal deficits future tax obligations. A -ey discussion would be what proportion of increased spending
resulting from increased donor funds goes to either recurrent or development expenditures. The answer
can shed some light on the implications of an aid freeze to recipient countries, and highlight how the
Kenyan government responds to resultant budgetary deficits.This study will focus on the impact of
foreign aid on government public spending in Kenya.
"$0 LITERATURE REVIEW
"$# THEORETICAL FRAMEWORK
There has been concern over the role of and effectiveness of forein aid flow in promoting growth and
development in developing countries. !iven that, most of the foreign aid to Kenya is channeled through public
sector, its not possible therefore to analyse the effectiveness of these flows in Kenya without studying the impact
of such flows on public spending)agat, 2339$
The development theory upon which the issue of forein aid drwas its existence dates bac- to the 2350s 'arshall
plan and the emergency of growth models in the late 2390s. Adam *mith and "avid Eicardo advocated for
specialization of labor, foreign trade, capital accummulation and increased productivity as being the fundamental
determinants of growth*chumpeter, 2393$.
This analytical paper borrows heavily from 6arod "omar model which extended the Keynesian emphasis on
investment to include capacity increasing effects, the sencond was the emphasis by economists on physical
capital and the view that shortages of capital largely account for the poverty of the developing countries. The role
of and impact of foreign aid followed logically from this analysis)agat 2339$
6eller234?$ developed across@sectional times series mode to analyse the behavior of the public sector in all
African countries to foreign flow. *pecifically hewas concerned whether foreign capital inflow has resulted in
increased public or private consumption or increased investment re+uired to boost the economy.
The model focuses on the interractions among several categories of public expenditure and the relationship
between domestic and foreign revenues. It further distinguishes alternative types of aid and their sources.
6eller assumed that decision ma-ers maximise their utility subect to some constraints li-e alternative use of
public resources, distribution of output between private and public alternative modes of domestic financing and
alternative types of external assistance such as grants and loans.
The relationship between foreign aid and economic growth has drawn great attention for years, but the
empirical results are mixed. There is now a large literature on the relationship between aid and growth.
For a recent comprehensive survey of the theoretical and empirical literature on foreign aid and growth
see 6udson /009$ and 'c!illivray, et al. /001$.
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A study conducted by 'c!illivray /00?$ demonstrates how aid to African countries not only increases
growth but also reduces poverty. Furthermore, the author points out the important fact that continuously
growing poverty, mainly in sub@*aharan African countries, compromises the '"!s 'illennium
"evelopment !oals$ main target of dropping the percentage of people living in extreme poverty to half
the 2330 level by /02?. 6is research econometrically analyzes empirical, time series data for 2317@
2333. The paper concludes that the policy regimes of each country, such as inflation and trade
openness, influence the amounts of aid received. %uattara /001$ analyzes the effects of aid flows on
-ey fiscal aggregates in *enegal. This paper utilizes data over the period of 2340 /000 and primarily
focuses on the interaction between aid and debt. The author determined three main outcomes of his
study. First, that a large portion of aid flows, approximately 92
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A study by Karras /001$ investigates the correlation between foreign aid and growth in per capita !"#
using annual data from the 2310 to 2334 for a sample of 42 aid@receiving developing countries. This
paper concludes that the effect of foreign aid on economic growth is positive, permanent, and
statistically significant. 'ore specifically, a permanent increase in foreign aid by >/0 per person results
in a permanent increase in the growth rate of real !"# per capita by 0.21 percent. These results are
obtained without considering the effects of policies. !omanee, !irma, and 'orrissay /00?$ address
directly the mechanisms via which aid impacts growth. =sing a sample of /? *ub@*aharan African
countries over the period 2340 to
ournal of International 8usiness and &ultural *tudies 2334, the authors determined that foreign aid has
a significant positive effect on economic growth. Furthermore, they identified investment as the most
significant transmission mechanism.
In his research, Eam /009$ loo-s at the issue of poverty and economic growth from the view of
recipient country;s policies as being the -ey role in the effectiveness of foreign aid. evertheless, in his
paper the author disagrees with the widely@ac-nowledged view that redirecting aid toward countries with
better policies leads to higher economic growth and poverty reduction rates. As a result, based on his
research the author concludes that evidence is lac-ing to support the leading belief that directing foreign
assistance to countries with good Jpolicy; will increase the impact on growth or poverty reduction in
developing countries
eru, /005$ did a study on the fiscal response by the government to changes in aid flow. 6e
recommended further research on the brea-down of the sources of revenue and expenditure use by the
public sector at sectoral levelBe.g., transport and communications networ-s, education, health,
agriculture, defence, etc.Bwould shed more light on the understanding of how policy ma-ers in the aid
recipient country ma-e their public sector decisions.
'wau2379$ attempted to analyse the impact of foreign aid inflows on the Kenya economy. 6e
examined the effects of foreign capital inflow on investment, foreign trade and hence the balance of
payment, money supply and economic growth in Kenya. 6e used %)* method of estimation. 6e found
out that, foreign capital inflow have some stimulatory effects on domestic investment, with small effects
on economic growth.
)agat2339$ did a study on foreign aid impact on public expenditure and its fungability in Kenya for a
period between 2349@233/. 6e sought to analyse whether foreign aid assistance provides for
development expenditure is fungible, whether it reduces tax efforts tothe government and the impact of
total foreign aid and the macroeconomic reforms of public expenditure.
1"
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"$" ANALYTICAL FRAMEWORK/MODEL
This section discusses the methodology used for analysing the government;s response to aid flow
fluctuations resulting from aid freezes. The approach used to determine the effects of foreign aid on
government expenditure follows 6eller;s 234?$ utility model, which assumes that the recipient country
intends to maximize the social welfare of its own citizens in the face of budgetary constraints and uses
aid flows from overseas as an instrument in pursuit of the obective. Cariants of this model include
'c!uire 2347$: #ac- and #ac- 2330, 2335$: and Feyzioglu et al. 2337$. Assume that the
government;s obective is to maximize the welfare utility function subect to the prevailing budget
constraint. To achieve the obective, policy ma-ers formulate targeted levels of expenditure based on
proected economic growth and social development obectives. For simplicity, assume that the
government purchases some minimum +uantities of two types of public goodsBnon@
developmentrecurrent$ !E$ and development !d$Bfor its citizens. *upposing the welfare utility
function is multiplicative and is specified as
'aximize U (GR,Gd) = GR L Gd 1-L.............................................i$
where the
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Gt = !0+ N1DRt+ N2PAt +[N2M +1- M] PJAt+ Otiii$
Ot this represents the error term
All the variables will be expressed as a ratio of real !"#.
V&*1&>9 D7'*181+- &-. D&& S+,*'7
In order to test the implications of these models, a panel of aggregate data on foreign aidDgrants on
Kenya for a period of 20 years/000@/020$ was obtained from &entral ban- of Kenya. The sample
contains aggregate data for government expenditure and revenues for the study period. e can only
understand about the impact of aid flow once we factor in aid freeze as to be able tu understand to
government spending once aid is frozen. The data used in the empirical analysis is given in Appendix
Table 2.
"$3 EMPIRICAL DATA
Foreign aid and public government spending
E E *+uare Adusted E *+uare *td. (rror of the (stimate
.945a .//9 .254 5.257
C+??1'1-7&
'odel
=nstandardized &oefficients
*tandardized
&oefficients
8 *td. (rror 8eta
2 &onstant$ 9.57/ /.050
#roect grants and program grants for the
period /000@/020
.97/ ./33 .945
'odel
3?.0< &onfidence Interval for 8
t *ig. )ower 8ound =pper 8ound
2 &onstant$ /.2?3 .0?3 @./03 7.345
#roect grants and program grants for the
period /000@/020
2.120 .29/ @.23? 2.2?3
a. "ependent Cariable Total government expenditureEecurrent and development$
!overnment taxes and non taxes revenue and public government spending
12
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M+.9 S,&*@>
'odel
&hange *tatistics
E *+uare &hange F &hange df2 df/ *ig. F &hange "urbin@atson
2 .150 2?.52/ 2 3 .009 /./13
b. "ependent Cariable Total government expenditureEecurrent and development$
A%CAb
'odel *um of *+uares df 'ean *+uare F *ig.
2 Eegression 42.325 2 42.325 2?.52/ .009a
Eesidual 9/./13 3 9.134
Total 229.27/ 20
a. #redictors &onstant$, !overnment revenue collection from /000@/020
1
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M+.9 S,&*@>
'odel
&hange *tatistics
E *+uare &hange F &hange df2 df/ *ig. F &hange "urbin@atson
2 .150 2?.52/ 2 3 .009 /./13
b. "ependent Cariable Total government expenditureEecurrent and development$
A%CAb
'odel *um of *+uares df 'ean *+uare F *ig.
2 Eegression 42.325 2 42.325 2?.52/ .009a
Eesidual 9/./13 3 9.134
b. "ependent Cariable Total government expenditureEecurrent and development$
C+??1'1-7&
'odel
=nstandardized &oefficients
*tandardized
&oefficients
8 *td. (rror 8eta
2 &onstant$ 2.774 2.?/9
!overnment revenue collection
from /000@/020
.702 ./0? .439
a. "ependent Cariable Total government expenditureEecurrent and development$
C+??1'1-7&
'odel
3?.0< &onfidence Interval for 8
t *ig. )ower 8ound =pper 8ound
2 &onstant$ 2./57 ./94 @2.?10 ?.555
!overnment revenue
collection from /000@/020
5.325 .009 .557 2./19
a. "ependent Cariable Total government expenditureEecurrent and development$
14
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)et;s first discuss the estimated results that are presented in Table /. The conventional variables
behave very much the same way as the model predicts, and the estimated coefficients are statistically
significant. The R2values range from a low of 0.//9 to a high of 0.439.
These values, though relatively low, are acceptable for a panel series data for study and are
comparable to those obtained in other studies. The coefficients of the first two variables in model iii$ are
expected to be positive and the results are consistent.
Foreign aid variable has a positive sign in all the cases, indicating that foreign aid appears to have an a
positive effect on government spending in Kenya. This coefficient is statistically significant for all cases
at 3?< confidence level. The s+uare term is also found to be statistically significant.
"$; CONCLUSIONS AND POLICY IMPLICATIONS
This paper analyzes the effects of foreign aid on the government public spending in Kenya. These
effects are analyzed using panel data series for foreign aidgrants$, government revenue and
expenditure. %ne of the contributions of this paper is its input to the existing empirical literature on the
effects of foreign aid on economic growth of developing countries sampling out Kenya as a case study.
The maor point emerging from this wor- is that foreign aid has a positive impact on economic growth of
developing countries Kenya included. The variables are positive indicating that foreign aid has a positive
effect on public spending. Aid supplements government revenue and thus included in the budgetary
process. This is not surprising given that Africa is the largest recipient of foreign aid than any other
region. Thus, the findings of this study are, for the most part, consistent with findings of previous studies
on the impact of foreign aid on public government spending.
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of International 8usiness and &ultural *tudies. #age /@22 httpDDu-.oneworld.netDguidesDaid
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/22.
A88-.1'7
17
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T&>9 #
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)*&-7K74%
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P*+'
)*&-7
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T+&9
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/000 /0?7 /9,727 /1,741 ?30,744 43,?9? 140,9//
/002 /5534 41,2/5 33?/0 2,/99,990 217,?/? 2,92/,31?
/00/ 4934 54,71/ 9?,5?3 2,/32,97? 297,392 2,990,9/1
/005 24111 49,/10 32,3/1 2,90/,525 /24,305 2,1/0,/21
/009 /1/37 49,534 200,13? 2,930,424 /0/,597 2,135,019
/00? ??19 70,770 71,999 2,142,330 /11,332 2,357,372
/001 /27?? 73,?73 220,240 2,339,45/ 519,4?5 /,510,347
/004 0 72,071 43,7/0 /,224,927 931,047 /,123,241
/007 //??9 22?,322 257,91? /,933,494 134,9/7 5,234,24?
/003 0 20/,729 20/,729 /,71?,4?4 792,712 5,17?,?/5
/020 0 2/0,4/0 2/0,4/0 5,557,725 2,/04,215 9,?90,55/
T+&9 #"6%!! !!%;60 #%00"%!0 "0%50!%"! ;%6#%536 "5%#%"5!
S+,*' C-*&9 >&-( +? K-@&% J,9@ "0##
T&>9 "
Fiscal year Total revenueTax and on tax$Ksh, 'illions/000 12?,940
/002 2,/04,127
/00/ 2,/23,9//
/005 2,559,151
/009 2,?1/,??5
/00? 2,433,131
/001 /,001,5/7
/004 /,5?1,3?4
/007 /,491,074
/003 5,205,1/1
18
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/020 5,?24,924
Total 21#46!#81"
S+,*' C-*&9 >&-( +? K-@&% J,9@ "0##
Results of analysed data
Correlations
Total
government
expenditure(Rec
urrent and
development)
Governemt
revenue
collection from
2000-2010
Pearson Correlation Total government
expenditure(Recurrent and
development)
1.000 .!"
Governemt revenue
collection from 2000-2010
.!" 1.000
#ig. (1-tailed) Total government
expenditure(Recurrent and
development)
. .002
Governemt revenue
collection from 2000-2010
.002 .
$ Total government
expenditure(Recurrent and
development)
11 11
Governemt revenue
collection from 2000-2010
11 11
1!
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Model Summaryb
%odel R R #&uare
'dusted R
#&uare
#td. rror of t*e
stimate
1 .!"a .+,0 .! 2.1+
a. Predictors/ (Constant) Governemt revenue collection from 2000-
2010
. ependent 3ariale/ Total government expenditure(Recurrent and
development)
Model Summaryb
%odel
C*ange #tatistics
R #&uare
C*ange 4 C*ange df1 df2 #ig. 4 C*ange urin-5atson
1 .+,0 1.,12 1 ! .00" 2.2+!
. ependent 3ariale/ Total government expenditure(Recurrent and development)
2"
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ANOVAb
%odel #um of #&uares df %ean #&uare 4 #ig.
1 Regression 1.!1, 1 1.!1, 1.,12 .00"a
Residual "2.2+! ! ".+!
Total 11".12 10
a. Predictors/ (Constant) Governemt revenue collection from 2000-2010
. ependent 3ariale/ Total government expenditure(Recurrent and development)
Coefficientsa
%odel
6nstandardi7ed Coefficients
#tandardi7ed
Coefficients
8 #td. rror 8eta
1 (Constant) 1. 1.2"
Governemt revenue
collection from 2000-2010
.01 .20 .!"
a. ependent 3ariale/ Total government expenditure(Recurrent and development)
21
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22/35
Coefficientsa
%odel
!.09 Confidence :nterval for 8
t #ig. ;o
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Correlations
Total
government
expenditure(Recurrent and
development)
Total government
revenue(Taxescollections and
'id)
Pearson Correlation Total government
expenditure(Recurrent and
development)
1.000 .!"
Total government
revenue(Taxes collections
and 'id)
.!" 1.000
#ig. (1-tailed) Total government
expenditure(Recurrent and
development)
. .002
Total government
revenue(Taxes collections
and 'id)
.002 .
$ Total government
expenditure(Recurrent and
development)
11 11
Total government
revenue(Taxes collections
and 'id)
11 11
2
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Model Summaryb
%odel R R #&uare
'dusted R
#&uare
#td. rror of t*e
stimate
1 .!"a .+,0 .! 2.1+
a. Predictors/ (Constant) Total government revenue(Taxes collections
and 'id)
. ependent 3ariale/ Total government expenditure(Recurrent and
development)
Model Summaryb
%odel
C*ange #tatistics
R #&uare
C*ange 4 C*ange df1 df2 #ig. 4 C*ange urin-5atson
1 .+,0 1.,12 1 ! .00" 2.2+!
. ependent 3ariale/ Total government expenditure(Recurrent and development)
24
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ANOVAb
%odel #um of #&uares df %ean #&uare 4 #ig.
1 Regression 1.!1, 1 1.!1, 1.,12 .00"a
Residual "2.2+! ! ".+!
Total 11".12 10
a. Predictors/ (Constant) Total government revenue(Taxes collections and 'id)
. ependent 3ariale/ Total government expenditure(Recurrent and development)
Coefficientsa
%odel
6nstandardi7ed Coefficients
#tandardi7ed
Coefficients
8 #td. rror 8eta
1 (Constant) 1. 1.2"
Total government
revenue(Taxes collections
and 'id)
.01 .20 .!"
a. ependent 3ariale/ Total government expenditure(Recurrent and development)
25
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26/35
Coefficientsa
%odel
!.09 Confidence :nterval for 8
t #ig. ;o
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Coefficient Correlationsa
%odel
Total government
revenue(Taxes
collections and'id)
1 Correlations Total government
revenue(Taxes collections
and 'id)
1.000
Covariances Total government
revenue(Taxes collections
and 'id)
.0"2
a. ependent 3ariale/ Total government expenditure(Recurrent and
development)
Residuals Statisticsa
%inimum %aximum %ean #td. eviation $
Predicted 3alue 2.+! 10.+! .2 2.+2 11
Residual -1.+ .!11 .000 2.0+ 11
#td. Predicted 3alue -1.10 1.2+ .000 1.000 11
#td. Residual -.! 2.2 .000 .!"! 11
a. ependent 3ariale/ Total government expenditure(Recurrent and development)
27
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Correlations
Total
government
expenditure(Recurrent and
development)
Governemt
revenuecollection from
2000-2010
Pearson Correlation Total government
expenditure(Recurrent and
development)
1.000 .!"
Governemt revenue
collection from 2000-2010
.!" 1.000
#ig. (1-tailed) Total government
expenditure(Recurrent and
development)
. .002
Governemt revenue
collection from 2000-2010
.002 .
$ Total government
expenditure(Recurrent anddevelopment)
11 11
Governemt revenue
collection from 2000-2010
11 11
28
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Model Summaryb
%odel R R #&uare
'dusted R
#&uare
#td. rror of t*e
stimate
1 .!"a .+,0 .! 2.1+
a. Predictors/ (Constant) Governemt revenue collection from 2000-
2010
. ependent 3ariale/ Total government expenditure(Recurrent and
development)
Model Summaryb
%odel
C*ange #tatistics
R #&uare
C*ange 4 C*ange df1 df2 #ig. 4 C*ange urin-5atson
1 .+,0 1.,12 1 ! .00" 2.2+!
. ependent 3ariale/ Total government expenditure(Recurrent and development)
2!
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ANOVAb
%odel #um of #&uares df %ean #&uare 4 #ig.
1 Regression 1.!1, 1 1.!1, 1.,12 .00"a
Residual "2.2+! ! ".+!
Total 11".12 10
a. Predictors/ (Constant) Governemt revenue collection from 2000-2010
. ependent 3ariale/ Total government expenditure(Recurrent and development)
Coefficientsa
%odel
6nstandardi7ed Coefficients
#tandardi7ed
Coefficients
8 #td. rror 8eta
1 (Constant) 1. 1.2"
Governemt revenue
collection from 2000-2010
.01 .20 .!"
a. ependent 3ariale/ Total government expenditure(Recurrent and development)
"
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31/35
Coefficientsa
%odel
!.09 Confidence :nterval for 8
t #ig. ;o
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Coefficient Correlationsa
%odel
Governemt
revenue
collection from2000-2010
1 Correlations Governemt revenue
collection from 2000-2010
1.000
Covariances Governemt revenue
collection from 2000-2010
.0"2
a. ependent 3ariale/ Total government expenditure(Recurrent and
development)
2
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Residuals Statisticsa
%inimum %aximum %ean #td. eviation $
Predicted 3alue 2.+! 10.+! .2 2.+2 11
Residual -1.+ .!11 .000 2.0+ 11
#td. Predicted 3alue -1.10 1.2+ .000 1.000 11
#td. Residual -.! 2.2 .000 .!"! 11
a. ependent 3ariale/ Total government expenditure(Recurrent and development)
Model Summary
b
%odel R R #&uare
'dusted R
#&uare
#td. rror of t*e
stimate
1 .",a .22" .1, ,.1,
a. Predictors/ (Constant) Proect grants and program grants for t*e
period 2000-2010
. ependent 3ariale/ Total government expenditure(Recurrent and
development)
Model Summaryb
%odel
C*ange #tatistics
R #&uare
C*ange 4 C*ange df1 df2 #ig. 4 C*ange urin-5atson
1 .22" 2.!, 1 ! .1"2 1.,,
. ependent 3ariale/ Total government expenditure(Recurrent and development)
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ANOVAb
%odel #um of #&uares df %ean #&uare 4 #ig.
1 Regression 2.,+ 1 2.,+ 2.!, .1"2a
Residual .+" ! !."!
Total 11".12 10
a. Predictors/ (Constant) Proect grants and program grants for t*e period 2000-2010
. ependent 3ariale/ Total government expenditure(Recurrent and development)
Coefficientsa
%odel
6nstandardi7ed Coefficients
#tandardi7ed
Coefficients
8 #td. rror 8eta
1 (Constant) ".,2 2.0,0
Proect grants and program
grants for t*e period 2000-
2010
."2 .2!! .",
a. ependent 3ariale/ Total government expenditure(Recurrent and development)
4
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Coefficientsa
%odel
!.09 Confidence :nterval for 8
t #ig. ;o