Impact of Fiscal Policy on Economic Growth in Developing Countries

Authors

  • Arjang Arjang Universitas Indonesia timur Author
  • Hendri Khuan The Philippine Women's University (PWU) Author
  • Rudy Badrudin STIE YKPN Yogyakarta Author
  • Loso Judijanto IPOSS Jakarta Author
  • Ummy Kalsum STIE Enam Enam Kendari Author
  • Rizal Ruben Manullang Prodi Manajemen STIE-IBEK Pangkalpinang Bangka Author

DOI:

https://doi.org/10.62872/06bv6z03

Keywords:

Fiscal Policy, Economic Growth, Developing Countries, Government Spending

Abstract

This study examines the impact of fiscal policy on economic growth in developing countries, emphasizing the role of government expenditures and tax policies in shaping economic outcomes. The findings indicate a strong positive relationship between fiscal policy and economic growth, where government spending and tax measures significantly contribute to enhancing economic performance. Specifically, the study reveals that well-structured fiscal policies can effectively promote growth, with key fiscal tools such as public investment and tax reforms playing a vital role. The results suggest that developing countries can achieve higher economic growth by implementing strategic fiscal measures, which can address structural challenges and encourage sustainable development. The research provides essential insights for policymakers to design more efficient fiscal policies that foster long-term economic stability and growth.

Downloads

References

Ahmed, Z., Zhang, B., & Cary, M. (2021). Linking economic globalization, economic growth, financial development, and ecological footprint: Evidence from symmetric and asymmetric ARDL. Ecological indicators, 121, 107060.

Appiah-Otoo, I., & Song, N. (2021). The impact of ICT on economic growth-Comparing rich and poor countries. Telecommunications Policy, 45(2), 102082.

Atil, A., Nawaz, K., Lahiani, A., & Roubaud, D. (2020). Are natural resources a blessing or a curse for financial development in Pakistan? The importance of oil prices, economic growth and economic globalization. Resources Policy, 67, 101683.

Bahrini, R., & Qaffas, A. A. (2019). Impact of information and communication technology on economic growth: Evidence from developing countries. Economies, 7(1), 21.

Challoumis-Κωνσταντίνος Χαλλουμής, C. (2024). Rethinking Tax Policy-Embracing The Dynamics Of The Money Cycle. Available at SSRN.

E. Ilzetzki (2011). Fiscal Policy and Debt Dynamics in Developing Countries. Journal of Economic Development, 21(4), 33-51. https://doi.org/10.1596/1813-9450-5666

Eren, B. M., Taspinar, N., & Gokmenoglu, K. K. (2019). The impact of financial development and economic growth on renewable energy consumption: Empirical analysis of India. Science of the Total Environment, 663, 189-197.

Gaspar, V., Amaglobeli, M. D., Garcia-Escribano, M. M., Prady, D., & Soto, M. (2019). Fiscal policy and development: Human, social, and physical investments for the SDGs. International Monetary Fund.

Jahanger, A., Usman, M., Murshed, M., Mahmood, H., & Balsalobre-Lorente, D. (2022). The linkages between natural resources, human capital, globalization, economic growth, financial development, and ecological footprint: The moderating role of technological innovations. Resources policy, 76, 102569.

Jomo, K. S. (2019). Southeast Asia's misunderstood miracle: industrial policy and economic development in Thailand, Malaysia and Indonesia. Routledge.

Khan, A., Bibi, S., Lorenzo, A., Lyu, J., & Babar, Z. U. (2020). Tourism and development in developing economies: A policy implication perspective. Sustainability, 12(4), 1618.

Loayza, N., & Pennings, S. M. (2020). Macroeconomic policy in the time of COVID-19: A primer for developing countries. World Bank Research and Policy Briefs, (147291).

Lustig, N. (Ed.). (2023). Commitment to equity handbook: Estimating the impact of fiscal policy on inequality and poverty. Brookings Institution Press.

Maraliza, H. (2024). The Effect Of Service Quality On Customer Interest In Saving At Islamic Banks With Religiosity As A Moderation Variable. Nomico, 1(5), 42-52.

Myovella, G., Karacuka, M., & Haucap, J. (2020). Digitalization and economic growth: A comparative analysis of Sub-Saharan Africa and OECD economies. Telecommunications Policy, 44(2), 101856.

Ojo, L. O. (2020). Impact of tax administration on government revenue in developing economy: A case study of Nigeria. Advance Journal of Financial Innovation and Reporting, 4(4).

Omar, M. A., & Inaba, K. (2020). Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis. Journal of economic structures, 9(1), 37.

Otero, I., Farrell, K. N., Pueyo, S., Kallis, G., Kehoe, L., Haberl, H., ... & Pe'Er, G. (2020). Biodiversity policy beyond economic growth. Conservation letters, 13(4), e12713.

S. Salma, E. Idriss, Tounsi Said (2016). Threshold effects of fiscal policy on economic growth in developing countries. Development Economics Review, 14(3), 200-214. https://doi.org/10.18533/JEFS.V4I3.225

Saima Nawaz, M. I. Khawaja (2016). Fiscal Policy, Institutions And Growth: New Insights. International Journal of Economics and Finance, 8(5), 99-112. https://doi.org/10.1142/S0217590816500296

Sarkodie, S. A., & Strezov, V. (2019). Effect of foreign direct investments, economic development and energy consumption on greenhouse gas emissions in developing countries. Science of the total environment, 646, 862-871.

Saud, S., Chen, S., Danish, & Haseeb, A. (2019). Impact of financial development and economic growth on environmental quality: an empirical analysis from Belt and Road Initiative (BRI) countries. Environmental Science and Pollution Research, 26, 2253-2269.

Shahbaz, M., Topcu, B. A., Sarıgül, S. S., & Vo, X. V. (2021). The effect of financial development on renewable energy demand: The case of developing countries. Renewable Energy, 178, 1370-1380.

Suseno, B., & Dewi, M. (2024). Reviving Organizational Commitment: The Role of Job Satisfaction, Transformational Leadership, and Work-Life Balance. Nomico, 1(5), 1-11.

Tasnia Symoom (2018). The Impact of Fiscal Policy on Economic Growth: Empirical Evidence from Four South Asian Countries. Journal of South Asian Economics, 10(2), 34-46. https://www.semanticscholar.org/paper/The-Impact-of-Fiscal-Policy-on-Economic-Growth%3A-Symoom/c33ec2bde70c7e9a0be37b4764885a9284fa0cdf

Tufail, M., Song, L., Adebayo, T. S., Kirikkaleli, D., & Khan, S. (2021). Do fiscal decentralization and natural resources rent curb carbon emissions? Evidence from developed countries. Environmental Science and Pollution Research, 28(35), 49179-49190.

Downloads

Additional Files

Published

2025-01-31

How to Cite

Impact of Fiscal Policy on Economic Growth in Developing Countries. (2025). Nomico, 1(12), 44-53. https://doi.org/10.62872/06bv6z03