Public Expenditure and Income Inequality in ECOWAS

Abstract

High disparities in the distribution of public expenditure in ECOWAS have
exacerbated economic inequalities among its residents, as large individuals
or groups receive disproportionate attention. Moreover, the effectiveness of
public spending in enhancing productivity has faced severe problems in the
region, thereby posing substantial challenges to the goal of reducing income
inequality in the ECOWAS region. This study investigates the effects of public
expenditure on income inequality in ECOWAS from 2000 to 2021. Using the
panel ARDL approach, the study found that agriculture productivity and
public expenditure positively and significantly influence income inequality in
ECOWAS. The positive and significant impact of public expenditure on income
inequality in ECOWAS suggests that public spending primarily benefits
higher-income groups or is directed toward projects that do not address the
needs of the poor, which contributed to increased income inequality. The
government should increase public expenditures on social programs that
directly benefit the poor and vulnerable populations. Investments in education,
healthcare, and social safety nets can improve human capital development
and reduce income inequality