The Impact of Public Spending ( Expenditures ) on Economic Growth in Iraq for the Period 2004-2019

| ABSTRACT Although public expenditures are a tool used by the state to manage public revenues and satisfy public needs, they are one of the most important tools of the country's financial policy, through which the state intervenes in economic and social life and translates the objectives of economic policy into real projects and programs of work. It is possible to assess the performance of the government by studying and analyzing the development and structure of the general budget, and despite the high volume of public expenditures in Iraq during the research period, the state was not able to achieve the economic and social goals represented by achieving high rates of growth and economic and social balance, as there was an imbalance In the structure of public expenditures, and this leads to an imbalance in the public budget, which reinforced its deepening, which is also reflected in the imbalance in the economic structure of the country.


The importance of the research
The importance of the research stems from the important role of government spending in stimulating economic growth, and this research tries to shed light on this role and give a clear vision of the Iraqi economy.

Research Objective
The research aims at the following: 1-Analyzing the relationship between government spending and gross domestic product in the Iraqi economy.
2-Analysis of the relationship between government spending and the average per capita share in the Iraqi economy.

Spatial boundaries: the Iraqi economy
Time limits: 2004-2018

Research method
The research combines the descriptive and analytical methods in presenting the economic facts contained in the research, as well as the quantitative method in building standard models.

Structure of the research
The research was divided into three chapters; the first chapter dealt with the conceptual framework of public spending (Expenditure) and economic growth, while the second chapter included an analysis of the reality of public spending and economic growth in the Iraqi economy, while the third chapter dealt with the assessment and analysis of the relationship between public spending and economic growth in Iraq.

The concept of public spending (Expenditure):
Public spending is one of the variables of aggregate demand, as it is affected by economic conditions in varying degrees, so decision users try to adapt public spending rates to suit basic needs, and financial thought includes many definitions of public spending (expenditures). Among the most important of these definitions, public spending is all payments and purchases made by different government agencies, as it includes payments and purchases that the private sector cannot provide but are important for the public interest as a whole. Examples include spending on defense, infrastructure, health, education, and social welfare payments (Tata, 2007,21).
It also defines public spending as a sum of money that comes out of the financial liability of a public legal person with the aim of satisfying public needs (Muhammad, 2013, 4).
In addition, public spending is defined as a sum of money spent by the state for the purpose of achieving a public benefit (Al-Obaidi, 2011, 56).
Also, the prevailing concept of economists for public spending as "a monetary amount paid by a public person in order to satisfy public needs" (Al-Wadi, 2009, 100).

Types of spending (Expenditure)
Public spending can be divided into two main parts, which can be represented as follows: (Daoud et al., 559: 2000).
1-Consumer spending: General consumer spending consists of two parts. The first includes the services provided by states to members of society and the means associated with these services, which include wages, salaries, and military expenditures. The second type is the aid and subsidies provided by the state to projects and individuals, usually called transformational expenditures. 2-Investment spending: Investment spending is the second component of income (individual income) after consumption, and its exposure to fluctuations affects the overall economy. Investment in its general sense is a stream of spending on new fixed capital goods and services such as machinery, factories, roads, intermediate goods, and new construction during a period, or it is spending on capital equipment for periods of time that are more than a year or building projects.

The concept of economic growth
Economic growth represents the tangible summation of economic and non-economic efforts in society, which is a necessary but not sufficient condition to improve the standard of living for individuals. According to the different viewpoints of researchers and economic writers, some of them defined it as the expansion of the real output or the expansion of the per capita share of the real national product, and it thus reduces the burden of lack of resources (Mohammed, 2013, 5).
In addition, economic growth is defined as a positive expression in the level of production of goods and services in a country during a specific period of time, usually a year (Boulhiyeh, 2016, 93).
Economic growth is also defined as a subjective process in which real income is doubled cumulatively and continuously through an extended period of time so that this increase in real income is greater than the rate of population growth (Al-Mamouri et al.,  2016, 102).
Finally, economic growth represents the expansion of the expected gross domestic product under the full employment of resources or the national product of a country (Samuelson, and Nordhaus, 2001, 86).

Types of economic growth
There are many types of economic growth, so it is possible to distinguish between three types of economic growth as follows (Al-Rashdan, 2008, 51).
1-Spontaneous or natural growth: it is the growth that occurs spontaneously in the manner of economic freedom and requires great flexibility from the economic structure in order for the economic variables to interact in the country in which it occurs automatically without relying on economic plans and this type of growth has been followed by advanced capitalist countries since The Industrial Revolution. 2-Transient growth: Transient growth occurs as a result of temporary emergency factors, usually external factors, as they quickly disappear, and when these factors are eliminated, the growth that they caused will disappear with them; that is, it is the one who has the character of continuity and stability, because this growth takes place in the light of rigid social and cultural structures, which makes it unable to create many effects of multiplier and accelerator, or leads to perpetuating the phenomenon of growth by development, which prevails in most developing countries in general and Arab countries in particular. 3-Planned growth: This type of growth occurs with the intervention of the state by setting up a comprehensive planning process for the resources and requirements of society, with the capabilities of the planners and the realism of the drawn plans. It is also linked to the effectiveness of implementation, and the effectiveness of this pattern is closely related to follow-up in the planning process at all levels.

An analysis of the reality of public spending in Iraq for the period (2004-2019)
The path of public spending in Iraq can be known through Public expenditures continued to rise, as they rose in 2007 to reach (39031232) million dinars. This rise is due to the increase in oil revenues, which constitute the main financier of public spending. In 2014, the value of public spending decreased to (80473517) million dinars and the reason for the decrease in the value of public spending compared to its counterpart in the year 2013 to the failure to approve the 2014 budget (Central Bank of Iraq, 2014, 70).

Analysis of the reality of the gross domestic product in Iraq for the period (2004-2019)
The reality of GDP in Iraq can be observed through what Table (1) indicates for the period (2004-2019), as it is noted that the gross domestic product amounted to about (532353558) million dinars in 2004, as it appears that the trend of the gross domestic product to increase and this is evident during the year 2007 As it amounted to about (111455813) million dinars, as it was linked to a large extent in the production of the crude oil sector, and this reflects a major imbalance in the production structure that makes the Iraqi economy and its stability subject to fluctuations that occur in the global oil markets. Also, the dominance of the oil sector over the Iraqi economy will leave imbalances future economic and market.
The GDP also continued to rise, reaching 2013 about (273587529)  However, the gross domestic product rose from (251064479) million dinars in 2018 to (277884011) million dinars in 2019. This rise is attributed to the financial policies adopted by the government and the wave to finance spending, not to rebuild the liberated areas.

Analysis of the reality of the average per capita share in Iraq for the period (2004-2019)
The path of the average per capita share in Iraq can be traced through the figures in Table (

Measuring and analyzing the impact of government spending on economic growth 4.1 Philips-Perron (P-P) test.
The (PP) test is more accurate in small-sized samples than the (ADF) test, and as a result, we will display the results of (PP) and compare them with the results of (ADF), and the results of both tests were similar and did not settle at the level (Level), but settled at the first difference (1) With a level of significance (8%) and only at the fixed limit (intercept) for all variables, and from here we must reject the null hypothesis (H0 = 0) and accept the alternative hypothesis (H1 = 1), as in the following table.

Estimating and analyzing the relationship between government spending and gross domestic product. 4.2.1 First, the ARDL model was tested.
After we tested the static time series of economic variables (government spending) as an independent variable and (and GDP) as a dependent variable, it was found that all of them were stable at the first difference I (1) and with the availability of this condition, we were able to apply the ARDL model test, and the table below shows us the test results for this model.

Table (4) ARDL Model Test Results
Source: The table prepared by the researcher based on the appendix (-----).
Table (4) shows us that the ARDL model automatically determines the degrees of time slowdown for the two variables (GDP, G) if the degree of time slowing down of the dependent variable (GDP) is one degree while the independent variable (G) has no time delay period. The results showed (Adjusted R-squared) news that G as an independent variable explained (86%) of the changes that occurred in the dependent variable (GDP) and that (14%) was due to other factors not included in the model; in other words, (86%) is the ability of the independent variable (G)) to predict the dependent variable GDP. As for the (F-statistic) test at a probability level (0.000002Prob:.), less than (5%), it indicates the overall significance of the model in terms of The statistic indicates the D-W stats, which reached its peak (1.890658), and this explains that the model is free from the problem of autocorrelation.

The results of the limits (Bounds) test for co-integration
The Limits (Bounds) Test is used to find out the extent to which there is a long-term equilibrium relationship (the presence of cointegration) between (government spending on the education sector) as an independent variable and (GDP) as a dependent variable by comparing the F-statistic with the upper and lower critical values, as in The following table:-
We note from Table (5) that the calculated (F-statistic) value reached 5.358615), which is greater than the maximum and minimum tabular value, as they reached (4.16), (3.62) at the level of significance (5%), which means that we reject the null hypothesis and accept The alternative hypothesis, which means that there is a co-integration relationship between government spending and GDP, that is, the existence of a long-term equilibrium relationship. Third: Test the estimated parameters (short term) and the unconstrained error correction factor.
This test shows the estimation of the short-term parameters in order to reveal the degree of influence of the independent variable on the dependent variable, as well as to determine the type of short-term relationship, and the error correction coefficient shows the speed of return in the long term to equilibrium, and the We note through Table (6) the results of estimating the parameters of the independent variable in the short term, as the table shows the direct relationship between (GDP) and (G), that is, when (G) changes by one unit leads to a change in the gross domestic product (GDP) by (10%) units at a significant level (0.4336Prob=) with other factors remaining constant, and this is consistent with the logic of the economic theory, and that the amount (10%) represents the marginal slope of GDP.
The estimated relationship also showed that the Unrestricted Error Correction Model (UECM) amounted to (-0.280383) negative and significant, with a probability (Prob = 0.0230), and this reflects the existence of a short-term equilibrium relationship between the studied variables towards a long-term equilibrium relationship, and the value of the error correction coefficient It means that (28%) of the equilibrium (short-term imbalance) in (GDP) in the previous period (t-1) can be corrected in the current period (t) towards the long-term equilibrium relationship due to any shock or change in the variable The independent, meaning that the consumption takes about (3.5) years towards the equilibrium value due to any shock in the model or a change in the independent variable.

Test the estimated parameters (long-term).
This test shows the estimation of the parameters in the long run in order to reveal the degree of influence of the independent variable on the dependent variable, as well as to determine the type of long-term relationship, as in the following table: -  (7) shows us the results of estimating long-term parameters, as the table shows that there is a direct relationship between (G) and (GDP); that is, when (G) changes by one unit, it leads to a change (GDP) by (37%) units, while remaining The other factors are constant, and at a significant level (Prob = 0.3481), and this is very logical from an economic point of view. The higher the government spending, the higher the GDP, as (37%) represents the marginal slope of GDP, which is high if compared to the short period ( 10%).

First, the ARDL model was tested.
After the static time series of economic variables (government spending) was tested as an independent variable and (average per capita share) as a dependent variable, it was found that all of them were stable at the first difference I (1) and with the availability of this condition, we were able to apply the ARDL model test, and the Table (10) shows us that the ARDL model automatically determines the degrees of time slowdown for the two variables (GDP, G AP) if the degree of time slowing of the dependent variable (AP GDP) is one degree while the independent variable (G) has no time delay and may The results of (Adjusted R-squared) showed that G as an independent variable explained (80%) of the changes that occurred in the dependent variable (AP GDP), and that (20%) was due to other factors not included in the model, In other words, (80%) is the ability of the independent variable (G)) to predict the dependent variable GDP AP. As for the (F-statistic) test at a probability level (0.000019Prob:), less than (5%), it indicates the overall significance of the model in terms of The statistics indicate that the D-W statistics reached its peak (1.891767), and this explains that the model is free from the problem of autocorrelation.

Results of the Bound Test
The Bound Test is used to find out the extent of a long-run equilibrium relationship (the existence of co-integration) between (government spending) as an independent variable and (an average per capita GDP) as a dependent variable by comparing the Fstatistic with the limits of the highest and lowest critical values, as in The following table:- We note from Table (11) that the calculated (F-statistic) value amounted to 5.024325) which is greater than the maximum and minimum tabular value, as they reached (4.16), (3.62) at the level of significance (5%), which means that we reject the null hypothesis and accept The alternative hypothesis, which means the existence of a joint complementarity relationship between government spending on the education sector, the average per capita output, that is, the existence of a long-term equilibrium relationship.

Test the estimated parameters (short term) and the unconstrained error correction factor.
This test shows the estimation of the short-term parameters in order to reveal the degree of influence of the independent variable on the dependent variable, as well as to determine the type of short-term relationship, and the error correction coefficient shows the speed of return in the long term to equilibrium, and the  (12) the results of estimating the parameters of the independent variable in the short term, as the table shows the direct relationship between (AP GDP) and (G), that is, when (G) changes by one unit leads to a change in the average per capita share of the product (APGDP) by (14%) units at the level of significance (0.2668Prob:) with other factors remaining constant, and this is consistent with the logic of the economic theory, and that the amount (14%) represents the marginal slope of the average per capita GDP.
The estimated relationship also showed that the unconstrained error correction coefficient (UECM) reached a value of (-0.37) negative and significant, with a probability (Prob = 0.0133), and this reflects the existence of a short-term equilibrium relationship between the studied variables towards a long-term equilibrium relationship, and the value of the error correction coefficient It means that (73%) of the equilibrium imbalance (short-term imbalance) in (GDP AP) in the previous period (t-1) can be corrected in the current period (t) towards the long-term equilibrium relationship due to any shock or change in The independent variable, meaning that the consumption takes about (2.7) years towards the equilibrium value due to any shock in the model or a change in the independent variable.

Test the estimated parameters (long-term).
This test shows the estimation of the parameters in the long run in order to reveal the degree of influence of the independent variable on the dependent variable, as well as to determine the type of long-term relationship, as in the following table: -  Table prepared by the researcher   Table (13) shows us the results of estimating long-term parameters, as the table shows that there is a direct relationship between (G) and (AP GDP); that is, when (G) changes by one unit, it leads to a change (AP GDP) by (38%) units, With other factors remaining constant, and at a significant level (Prob = 0.1618), and this is very logical from an economic point of view, the higher the government spending, the higher the average per capita GDP, as (38%) represents the marginal slope of the average per capita GDP.
During the estimation of the short-term parameters in Table ( 12), it becomes clear that there is a direct relationship between government spending and the average per capita GDP, where the parameters of the dependent variable (AP GDP) indicated that it did not exceed only (14%), meaning that the direct relationship in the short term will continue In the long term, that is, the more government spending on the education sector leads to an increase in the average per capita GDP, and this is consistent with economic theory.

2-
The proportions of public spending were characterized by high and low levels due to the lifting of economic sanctions on Iraq and the massive increase in military spending as a result of the instability of the security situation in the country. 3-The development of economic growth in positive and negative ranges and that these violent and light fluctuations throughout the study period were originally represented by the quantities of crude oil production, which constitutes more than half of the output, which was affected by local and external shocks, so these conditions produced large fluctuations in the economic growth of the country.

Recommendations
1-The necessity to restructure the oil sector by directing its revenues generated from export operations, and not merely for operating the state apparatus and financing public spending, most of which goes to consumption. Rather, it requires transforming oil resources to achieve human development by investing in building human capital, modernizing infrastructure, and diversifying the production base. 2-Formation of national manpower with high and medium technical skills and capabilities through educational and training directives based on responding to the needs of the labor market, and that is through establishing national centers specialized for this purpose that organize the movement of Iraqi labor and give it the necessary facilities and assistance for its development. 3-Strengthening the structure of the local economy in order to increase its ability to receive local and external shocks, thus mitigating the fluctuations that affect the country's economic growth.
Funding: This research received no external funding.