Public expenditure and economic growth: A disaggregated analysis for developing countries

In this paper, we examine the growth effects of government expenditure for a panel of 30 developing countries over the 1970s and 1980s, with a particular focus on disaggregated government expenditures. Our methodology improves on previous research on this topic by explicitly recognizing the role of...

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Bibliographic Details
Published in:The Manchester School 2007-09, Vol.75 (5), p.533-556
Main Authors: Bose, Niloy, Haque, M. Emranul, Osborn, Denise R
Format: Article
Language:English
Subjects:
Bildungsinvestition
Budget deficits
Capital expenditures
Correlation
Correlation analysis
Cross-national analysis
Developing countries
Development economics
Economic growth
Economic impact analysis
Education
Einfluss
Entwicklungsland
Government spending
Investition
LDCs
Makroökonomie
Public expenditure
Studies
Wirtschaftswachstum
Öffentliche Ausgaben
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Summary:In this paper, we examine the growth effects of government expenditure for a panel of 30 developing countries over the 1970s and 1980s, with a particular focus on disaggregated government expenditures. Our methodology improves on previous research on this topic by explicitly recognizing the role of the government budget constraint and the possible biases arising from omitted variables. Our primary results are twofold. First, the share of government capital expenditure in GDP is positively and significantly correlated with economic growth, but current expenditure is insignificant. Second, at the disaggregated level, government investment in education and total expenditures in education are the only outlays that are significantly associated with growth once the budget constraint and omitted variables are taken into consideration.
ISSN:1463-6786
0025-2034
1467-9957
DOI:10.1111/j.1467-9957.2007.01028.x