TITLE:
Spatio-Temporal Analysis of the Determinants of Development Expenditure in County Governments in Kenya
AUTHORS:
Troon John Benedict, Christopher Maokomba, Penina Anyango, Daudi Meah, Samuel Wambua
KEYWORDS:
Development Expenditure, Spatial Panel Models, Fiscal Federalism, Devolution, Kenya Counties, Spatial Econometrics, Spillover Effects, Election-Year Effects, Electoral Cycle
JOURNAL NAME:
Modern Economy,
Vol.17 No.9,
September
24,
2026
ABSTRACT: Kenya’s 2010 Constitution handed major fiscal responsibilities to 47 new county governments, the aim being to move public services and development spending closer to citizens. A decade on, how much counties actually spend on development still varies widely from one to the next, and the reasons behind that variation remain poorly understood. This study asks what drives actual development expenditure across the 47 counties, using a balanced panel of 517 county-year observations that covers fiscal years 2014/15 through 2024/25. All monetary variables are converted to constant fiscal-year-2014/15 Kenya shillings using the Kenya Consumer Price Index, and two common-time controls, a fiscal-year inflation rate and a linear time trend, are added alongside seven substantive explanatory variables: the wage bill (WB), own-source revenue (OSR), national government fiscal transfers (NGF), development partner funds (DPF), pending bills (PB), a political coalition indicator (PC), and a binary election-year indicator (EL) marking the fiscal years tied to Kenya’s 2017 and 2022 general elections. Seven candidate spatial panel specifications were fitted and screened against a five-point assumption battery; the common-correlated-effects-augmented spatial autoregressive model with individual county fixed effects, SAR-FE (CCE), was retained as the final model on a tie-break by information criterion among three equally-scoring candidates. The spatial autoregressive parameter is positive and significant (λ = .204, p