Measuring and analyzing the relationship between public spending and GDP and its impact on economic growth in Iraq for the period 2000-2023

Abstract

The relationship between public expenditure and Gross Domestic Product (GDP) is a vital aspect within the framework of economic theory due to its influence on the potential to achieve economic growth and, subsequently, development. An increase in public spending—both current and investment—leads to a rise in GDP, particularly when the productive sectors contribute more effectively to output and economic diversification. This is especially true when the increase in spending is based on an efficient and realistic economic vision aimed at achieving specific objectives.

In the case of Iraq, public expenditure is largely financed by oil revenues, making it highly dependent on fluctuations in oil prices, which in turn are influenced by political, economic, and security crises. Consequently, Iraq has experienced noticeable volatility in public spending during the study period, coinciding with various domestic, regional, and global crises. This volatility has negatively impacted GDP and, by extension, the ability to achieve sustained economic growth and development. Therefore, by analyzing the relationship between public spending and GDP and its impact on economic growth, it becomes clear that there is a significant and positive relationship.