Fiscal Policy and Economic Recovery in Selected African Countries: The Role of Unemployment and Capital Expenditure in Post-Crisis Growth

Abstract

Fiscal policies are critical in fostering economic recovery, particularly during financial crises and pandemics in African nations. This study examines the influence of the unemployment rate, government spending, and capital expenditure on economic recovery in selected African countries. The research aims to assess the significance of these variables in times of crisis and to explore their interrelationships with economic recovery. Drawing upon Keynesian Economic Theory and Structural Adjustment Theory, the study establishes a theoretical framework for evaluating the efficacy of fiscal interventions. Utilising a deductive approach alongside multiple regression analysis, the research analyses data from ten African countries from 1981 to 2023. The results reveal that the unemployment rate and government capital expenditure significantly impact economic recovery, with the unemployment rate (β = 0.521, p < .001) and capital expenditure (β = 0.344, p < .001) showing strong positive relationships with economic recovery. However, overall government expenditure does not exhibit a statistically significant impact (β = -0.025, p = .508). The model explains 75.5% of the variance (R² = 0.755) in economic recovery, confirming the crucial role of employment-focused policies and capital investments in post-crisis recovery. The findings emphasise the need for policymakers to prioritise targeted infrastructure investments and employment-generation initiatives to drive sustainable economic growth and resilience in African economies.