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Public spending and outcomes : does governance matter?

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  • Rajkumar, Andrew Sunil
  • Swaroop, Vinaya
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    Abstract

    The authors examine the role of governance-measured by level of corruption and quality of bureaucracy-and ask how it affects the relationship between public spending and outcomes. Their main innovation is to see if differences in efficacy of public spending can be explained by quality of governance. The authors find that public health spending lowers child and infantmortality rates in countries with good governance. The results also indicate that as countries improve their governance, public spending on primary education becomes effective in increasing primary education attainment. These findings have important implications for enhancing the development effectiveness of public spending. The lessons are particularly relevant for developing countries, where public spending on education and health is relatively low, and the state of governance is often poor.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2840.

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    Date of creation: 31 May 2002
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    Handle: RePEc:wbk:wbrwps:2840

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    Related research

    Keywords: Health Systems Development&Reform; Public Health Promotion; Public Sector Economics&Finance; Decentralization; Health Monitoring&Evaluation; Health Economics&Finance; National Governance; Governance Indicators; Health Monitoring&Evaluation; Public Sector Economics&Finance;

    References

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    1. David Aschauer, 1988. "Is government spending stimulative?," Staff Memoranda 88-3, Federal Reserve Bank of Chicago.
    2. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1998. "The Quality of Goverment," NBER Working Papers 6727, National Bureau of Economic Research, Inc.
    3. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    4. Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-23, May.
    5. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
    6. Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996. "The composition of public expenditure and economic growth," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 313-344, April.
    7. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
    8. Filmer, Deon & Pritchett, Lant, 1999. "The impact of public spending on health: does money matter?," Social Science & Medicine, Elsevier, vol. 49(10), pages 1309-1323, November.
    9. Dollar, David & Kraay, Aart, 2002. " Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    10. Hanushek, Eric A, 1995. "Interpreting Recent Research on Schooling in Developing Countries," World Bank Research Observer, World Bank Group, World Bank Group, vol. 10(2), pages 227-46, August.
    11. Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
    12. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Governance matters," Policy Research Working Paper Series 2196, The World Bank.
    13. Marijn Verhoeven & Sanjeev Gupta & Erwin Tiongson, 1999. "Does Higher Government Spending Buy Better Results in Education and Health Care?," IMF Working Papers 99/21, International Monetary Fund.
    14. Pritchett, Lant, 1996. "Mind your P's and Q's : the cost of public investment is not the value of public capital," Policy Research Working Paper Series 1660, The World Bank.
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    Cited by:
    1. Spinesi, Luca, 2009. "Rent-seeking bureaucracies, inequality, and growth," Journal of Development Economics, Elsevier, vol. 90(2), pages 244-257, November.
    2. Cheryl Gray & Tracey Lane & Aristomene Varoudakis, 2007. "Fiscal Policy and Economic Growth : Lessons for Eastern Europe and Central Asia," World Bank Publications, The World Bank, number 6883.
    3. World Bank, 2003. "Decentralizing Indonesia : A Regional Public Expenditure Review Overview Report," World Bank Other Operational Studies 14632, The World Bank.
    4. Sonia Bhalotra, 2007. "Spending to Save? State Health Expenditure and Infant Mortality in India," The Centre for Market and Public Organisation 07/169, Department of Economics, University of Bristol, UK.
    5. McGuire, James W., 2006. "Basic health care provision and under-5 mortality: A Cross-National study of developing Countries," World Development, Elsevier, vol. 34(3), pages 405-425, March.
    6. Baldacci, Emanuele & Clements, Benedict & Gupta, Sanjeev & Cui, Qiang, 2008. "Social Spending, Human Capital, and Growth in Developing Countries," World Development, Elsevier, vol. 36(8), pages 1317-1341, August.
    7. Beraldo, Sergio & Montolio, Daniel & Turati, Gilberto, 2009. "Healthy, educated and wealthy: A primer on the impact of public and private welfare expenditures on economic growth," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(6), pages 946-956, December.
    8. Anton Eberhard & Orvika Rosnes & Maria Shkaratan & Haakon Vennemo, 2011. "Africa's Power Infrastructure : Investment, Integration, Efficiency," World Bank Publications, The World Bank, number 2290.
    9. Omar Azfar & Tugrul Gurgur, 2008. "Does corruption affect health outcomes in the Philippines?," Economics of Governance, Springer, vol. 9(3), pages 197-244, July.
    10. Baldacci, Emanuele & Hillman, Arye L. & Kojo, Naoko C., 2004. "Growth, governance, and fiscal policy transmission channels in low-income countries," European Journal of Political Economy, Elsevier, vol. 20(3), pages 517-549, September.
    11. Deolalikar, Anil B. & Jamison, Dean T. & Laxminarayan, Ramanan, 2007. "India's Health Initiative: Financing Issues and Options," Discussion Papers dp-07-48, Resources For the Future.
    12. Mária Lackó, 2006. "Tax Rates with Corruption: Labour-market Effects. Empirical Cross-country Comparisons on OECD Countries," IEHAS Discussion Papers 0604, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, revised 15 May 2006.
    13. Luca, SPINESI, 2005. "Rent-Seeking Bureaucracies in a Schumpeterian Endogenous Growth Model : Effects on Human Capital Accumulation, Inequality and Growth," Discussion Papers (ECON - Département des Sciences Economiques), Université catholique de Louvain, Département des Sciences Economiques 2005027, Université catholique de Louvain, Département des Sciences Economiques.
    14. Warlters, Michael & Auriol, Emmanuelle, 2005. "The marginal cost of public funds in Africa," Policy Research Working Paper Series 3679, The World Bank.
    15. Brian Levy, 2007. "Governance Reform : Bridging Monitoring and Action," World Bank Publications, The World Bank, number 6742.

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