Public Operating Expenditures and Economic Growth in the Democratic Republic of the Congo: An Econometric Analysis of Macroeconomic Effects (2000–2023)

Abstract

This paper investigates the macroeconomic impact of public operating expenditures on economic growth in the Democratic Republic of the Congo (DRC) over the 2000–2023 period. Grounded in Barro’s endogenous growth framework, the study deploys a Vector Error Correction Model (VECM) to scrutinize the short- and long-run dynamics between real GDP, public operating expenditures, public capital expenditures, and inflation. The empirical findings reveal that public operating expenditures exert a negative and highly significant crowding-out effect on long-run economic growth, yielding an elasticity of (-0.48). This drags on growth stems from the hypertrophy of institutional administrative costs and a chronic fiscal asymmetry that marginalizes public capital accumulation. In the short run, the impact is procyclical yet marginal (+0.09), reflecting a transient demand-side stimulus that rapidly dissipates due to domestic supply rigidities and recurrent inflationary pressures. Conversely, public investment exhibits a robust positive long-run elasticity of +0.65). Consequently, this paper strongly recommends a rendering of the DRC’s budgetary matrix. Policy interventions should prioritize the institutionalization of a fiscal golden rule to cap current expenditures, the digital transformation of civil service payrolls, and the strict preservation of fiscal space for growth-enhancing infrastructure.