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Public Expenditure And Economic Growth: A Disaggregated Analysis For Developing Countries

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  • NILOY BOSE
  • M. EMRANUL HAQUE
  • DENISE R. OSBORN

Abstract

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.

Suggested Citation

  • Niloy Bose & M. Emranul Haque & Denise R. Osborn, 2007. "Public Expenditure And Economic Growth: A Disaggregated Analysis For Developing Countries," Manchester School, University of Manchester, vol. 75(5), pages 533-556, September.
    • Handle: RePEc:bla:manchs:v:75:y:2007:i:5:p:533-556
    DOI: 10.1111/j.1467-9957.2007.01028.x
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    File URL: https://doi.org/10.1111/j.1467-9957.2007.01028.x
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    1. Charles R. Hulten, 1996. "Infrastructure Capital and Economic Growth: How Well You Use It May Be More Important Than How Much You Have," NBER Working Papers 5847, National Bureau of Economic Research, Inc.
    2. Romer,Paul M, 1989. "What determines the rate of growth and technological change?," Policy Research Working Paper Series 279, The World Bank.
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