Government spending on transport and communication and economic growth in Nepal

Abstract

The objectives of this study is to analyze the trends of transport and communication capital expenditures of Nepal, and to evaluate the relationship between government capital spending on transport and communication and its impact on real GDP in Nepal. It applied regression techniques with domestic time series annual data sets for the period 1990 to 2021. Data and measurement issues are addressed. Summary statistics, partial correlations, and unit root test are carried out along with t, F, R- squared, adjusted R-squared and DW statistics to find out accurate coefficients of estimated regression equation. The results showed that government capital expenditures on transport sector has significant positive effect on real GDP of Nepal along with the control variables broad money supply, total trade and gross capital formation. However, the impact of capital expenditures on communication sector was insignificant. To increase economic growth, government capital expenditures on transport sectors were friendlier in Nepal.