_____________________________________________________________________________________________________ *Corresponding author: E-mail: mukuigideon@gmail.com; Journal of Economics, Management and Trade 25(1): 1-11, 2019; Article no.JEMT.51677 ISSN: 2456-9216 (Past name: British Journal of Economics, Management and Trade, Past ISSN: 2278-098X) Effect of Public Spending on Economic Growth in Kenya Gideon Mukui 1* , Japheth Awiti 1 and Joseph Onjala 2 1 School of Economics, University of Nairobi, Kenya. 2 Institute for Development Studies, University of Nairobi, Kenya. Authors’ contributions This work was carried out in collaboration among all authors. Author GM did literature search, wrote the study and performed the statistical analysis. Author GM also wrote the first draft of the manuscript. Authors JA and JO guided the study and contributed in the finalization of the manuscript. All authors read and approved the final manuscript. Article Information DOI: 10.9734/JEMT/2019/v25i130185 Editor(s): (1) Dr. Afsin Sahin, Professor, Department of Banking School of Banking and Insurance, Ankara Haci Bayram Veli University, Besevler, Ankara, Turkey. Reviewers: (1) Mura Petru-Ovidiu, West University of Timișoara, Romania. (2) Olutosin A. Otekunrin, FUNAAB, Nigeria. Complete Peer review History: http://www.sdiarticle4.com/review-history/51677 Received 20 July 2019 Accepted 22 September 2019 Published 09 October 2019 ABSTRACT This study aimed at examining the relationship between public spending and economic growth and how the composition of government expenditure affects economic growth in Kenya using time series data from 1980 to 2014. To achieve the objectives, modified Granger causality and Autoregressive Distributed Lag model (ARDL) were used. The results revealed both short term and long term causality from economic growth to government expenditure but only short run causality from government expenditure to economic growth. Based on the economic classification, the long run ARDL regression results showed development expenditure promotes economic growth while government purchases have no significant effect on GDP. Other control variables such as inflation and unemployment had negative effect on economic growth. In terms of functional classification, the regression results showed that expenditure on education and infrastructure are important drivers of economic growth. The positive effect of health expenditure was not significant. Further, the regression results indicated that domestic savings and trade openness had significant positive effect on economic growth. Based on the empirical findings this study therefore recommends resources to be directed towards financing public infrastructure investment to improve economic Original Research Article