IDEAS home Printed from https://ideas.repec.org/p/fpr/eptddp/99.html
   My bibliography  Save this paper

Public spending in developing countries: trends, determination, and impact

Author

Listed:
  • Fan, Shenggen
  • Rao, Neetha

Abstract

The objective of this paper is to review trends in government expenditures in the developing world, to analyze the causes of change, and to develop an analytical framework for determining the differential impacts of various government expenditures on economic growth. Contrary to common belief, it is found that structural adjustment programs increased the size of government spending, but not all sectors received equal treatment. As a share of total government spending, expenditures on agriculture, education, and infrastructure in Africa; on agricultural and health in Asia; and on education and infrastructure in Latin America, all declined as a result of the structural adjustment programs. The impact of various types of government spending on economic growth is mixed. In Africa, government spending on agriculture and health was particularly strong in promoting economic growth. Asia's investments in agriculture, education, and defense had positive growth-promoting effects. However, all types of government spending except health were statistically insignificant in Latin America. Structural adjustment programs promoted growth in Asia and Latin America, but not in Africa. Growth in agricultural production is most crucial for poverty alleviation in rural areas. Agricultural spending, irrigation, education, and roads all contributed strongly to this growth. Disaggregating total agricultural expenditures into research and non-research spending reveals that research had a much larger impact on productivity than non-research spending.

Suggested Citation

  • Fan, Shenggen & Rao, Neetha, 2003. "Public spending in developing countries: trends, determination, and impact," EPTD discussion papers 99, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:eptddp:99
    as

    Download full text from publisher

    File URL: http://www.ifpri.org/sites/default/files/publications/eptdp99.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Shenggen Fan & Peter Hazell & Sukhadeo Thorat, 2000. "Government Spending, Growth and Poverty in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 1038-1051.
    2. Pardey, Philip G. & Roseboom, Johannes & Beintema, Nienke M., 1997. "Investments in african agricultural research," World Development, Elsevier, vol. 25(3), pages 409-423, March.
    3. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, pages 177-200.
    4. Fan, Shenngen & Hazell, Peter & Haque, T., 2000. "Targeting public investments by agro-ecological zone to achieve growth and poverty alleviation goals in rural India," Food Policy, Elsevier, vol. 25(4), pages 411-428, August.
    5. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    6. Malcolm Knight & Norman Loayza & Delano Villanueva, 1996. "The Peace Dividend: Military Spending Cuts and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 1-37, March.
    7. Fan, Shenggen & Zhang, Linxiu & Zhang, Xiaobo, 2000. "Growth and poverty in rural China: the role of public investments," EPTD discussion papers 66, International Food Policy Research Institute (IFPRI).
    8. Lindauer, David L & Velenchik, Ann D, 1992. "Government Spending in Developing Countries: Trends, Causes, and Consequences," World Bank Research Observer, World Bank Group, vol. 7(1), pages 59-78, January.
    9. Rao, M. Govinda, 1998. "Accommodating public expenditure policies: the case of fast growing Asian economies," World Development, Elsevier, vol. 26(4), pages 673-694, April.
    10. Pardey, Philip G. & Beintema, Nienke M., 2002. "Slow Magic: Agricultural R&D A Century After Mendel," Working Papers 14364, University of Minnesota, Center for International Food and Agricultural Policy.
    11. Jonakin, Jon & Stephens, Mark, 1999. "The impact of adjustment and stabilization policies on infrastructure spending in Central America," The North American Journal of Economics and Finance, Elsevier, vol. 10(1), pages 293-308.
    12. Elías, Victor Jorge, 1985. "Government expenditures on agriculture and agricultural growth in Latin America:," Research reports 50, International Food Policy Research Institute (IFPRI).
    13. James Gwartney & Randal Holcombe & Robert Lawson, 1998. "The Scope of Government and the Wealth of Nations," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 163-190, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Benin, Samuel & Mogues, Tewodaj & Cudjoe, Godsway & Randriamamonjy, Josee, 2009. "Public expenditures and agricultural productivity growth in Ghana," 2009 Conference, August 16-22, 2009, Beijing, China 51634, International Association of Agricultural Economists.
    2. Shonchoy, Abu S., 2010. "Determinants of government consumption expenditure in developing countries : a panel data analysis," IDE Discussion Papers 266, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    3. Niraj Prasad Koirala & Dhiroj Prasad Koirala, 2016. "Poverty and Inequality across the Nations: How Can Governments be Effective in Coping?," Economy, Asian Online Journal Publishing Group, vol. 3(1), pages 24-30.
    4. Zon, Adriaan van & Wiebe, Kirsten, 2010. "Efficient Development Portfolio Design for Sub Saharan Africa," MERIT Working Papers 050, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Allen, Summer L. & Badiane, Ousmane & Ulimwengu, John M., 2012. "Government Expenditures, Social Outcomes, and Marginal Productivity of Agricultural Inputs: A Case Study for Tanzania," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126663, International Association of Agricultural Economists.
    6. Fan, Shenggen & Nyange, David & Rao, Neetha, 2005. "Public investment and poverty reduction in Tanzania," DSGD discussion papers 18, International Food Policy Research Institute (IFPRI).
    7. Haggblade, Steven, 2007. "Returns to Investment in Agriculture," Food Security Collaborative Policy Briefs 54625, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    8. repec:lje:journl:v:19:y:2015:i:1:p:71-103 is not listed on IDEAS
    9. Pradip K. Bhaumik, 2010. "Rigidities restraining movement of a rural artisan from poor to non-poor state," International Journal of Social Economics, Emerald Group Publishing, vol. 37(1), pages 17-40, February.
    10. Abdulai, Awudu & Barrett, Christopher B. & Hazell, Peter, 2004. "Food aid for market development in Sub-Saharan Africa," DSGD discussion papers 5, International Food Policy Research Institute (IFPRI).
    11. World Bank, 2012. "Niger : Investing for Prosperity - A Poverty Assessment
      [NIGER: Investir pour la prospérité - Evaluation de la pauvreté au Niger]
      ," World Bank Other Operational Studies 12312, The World Bank.
    12. Arindam Banik & Pradip K. Bhaumik, 2005. "Supporting the poor but skilled artisans by making assets available to them: an empirical investigation in rural India," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(1), pages 45-66.
    13. Monterroso-Rivas, Ottoniel, 2008. "Institutions and public policies for rural development in Guatemala," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    14. Crawford, Eric W. & Jayne, Thomas S. & Kelly, Valerie A., 2005. "Alternative Approaches for Promoting Fertilizer Use in Africa, with Particular Reference to the Role of Fertilizer Subsidies," Staff Papers 11557, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    15. Bexheti, Abdylmenaf & Mustafi, Besime, 2015. "Impact of public funding of education on economic growth in Macedonia," BERG Working Paper Series 98, Bamberg University, Bamberg Economic Research Group.
    16. Ibrahim Worku, 2011. "Road Sector Development and Economic Growth in Ethiopia," Working Papers 004, Ethiopian Development Research Institute.
    17. World Bank, 2010. "Bangladesh - Public Expenditure and Institutional Review : Towards a Better Quality of Public Expenditure - Main Report," World Bank Other Operational Studies 2875, The World Bank.
    18. Bordignon, Jacopo & Breisinger, Clemens, 2015. "Policy changes in times of crisis: Evidence from the Arab Spatial Policy Analyzer:," IFPRI discussion papers 1471, International Food Policy Research Institute (IFPRI).
    19. Julian A. Lampietti & David G. Lugg & Philip Van der Celen & Amelia Branczik, 2009. "The Changing Face of Rural Space : Agriculture and Rural Development in the Western Balkans," World Bank Publications, The World Bank, number 13541.
    20. Delfin Go & Denis Nikitin & Xiongjian Wang & Heng-fu Zou, 2007. "Poverty and Inequality in Sub-Saharan Africa: Literature Survey and Empirical Assessment," Annals of Economics and Finance, Society for AEF, vol. 8(2), pages 251-304, November.
    21. World Bank, 2005. "Pakistan : Punjab Economic Report, Towards a Medium-Term Development Strategy," World Bank Other Operational Studies 8556, The World Bank.
    22. Nikopour, Hesam & Shah Habibullah, Muzafar, 2010. "Shadow Economy and Poverty," MPRA Paper 23599, University Library of Munich, Germany.
    23. Gabre-Madhin, Eleni Z. & Haggblade, Steven, 2004. "Successes in African Agriculture: Results of an Expert Survey," World Development, Elsevier, vol. 32(5), pages 745-766, May.
    24. Sadia Shabbir & Hafiz M. Yasin, 2015. "Implications of Public External Debt for Social Spending: A Case Study of Selected Asian Developing Countries," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(1), pages 71-103, Jan-June.
    25. World Bank, 2010. "Budgeting for Effectiveness in Rwanda : From Reconstruction to Reform," World Bank Publications, The World Bank, number 5953.

    More about this item

    Keywords

    Poverty alleviation; Government spending policy; Structural adjustment (Economic policy);

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fpr:eptddp:99. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/ifprius.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.