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Social Spending, Human Capital, and Growth in Developing Countries; Implications for Achieving the MDGs

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  • Emanuele Baldacci
  • Larry Q Cui
  • Benedict J. Clements
  • Sanjeev Gupta

Abstract

Using panel data from 120 developing countries from 1975 to 2000, this paper explores the direct and indirect channels linking social spending, human capital, and growth in a system of equations. The paper finds that both education and health spending have a positive and significant direct impact on the accumulation of education and health capital, and thus can lead to higher economic growth. The paper also finds that other policy interventions, such as improving governance, reducing excessive budget deficits, and taming inflation, can also be helpful in moving countries toward the Millennium Development Goals (MDGs). As such, higher spending alone is not sufficient to achieve the MDGs.

Suggested Citation

  • Emanuele Baldacci & Larry Q Cui & Benedict J. Clements & Sanjeev Gupta, 2004. "Social Spending, Human Capital, and Growth in Developing Countries; Implications for Achieving the MDGs," IMF Working Papers 04/217, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:04/217
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Yongzheng Yang & Robert Powell & Sanjeev Gupta, 2005. "The Macroeconomic Challenges of Scaling Up Aid to Africa," IMF Working Papers 05/179, International Monetary Fund.
    2. Awaworyi Churchill, Sefa & Yew, Siew Ling & Ugur, Mehmet, 2015. "Effects of Government Education and Health Expenditures on Economic Growth: A Meta-analysis," EconStor Preprints 110901, ZBW - German National Library of Economics.
    3. Augustin Kwasi Fosu, 2011. "Terms of Trade and Growth of Resource Economies: A Tale of Two Countries," WIDER Working Paper Series 028, World Institute for Development Economic Research (UNU-WIDER).
    4. Joharji Ghazi A. & Starr Martha A, 2011. "Fiscal Policy and Growth in Saudi Arabia," Review of Middle East Economics and Finance, De Gruyter, vol. 6(3), pages 24-45, February.
    5. Timushev, Evgeny, 2016. "Independence Decrease and Centralization: Analysis of Expenditures of the Consolidated Budget of the Komi Republic," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 4, pages 131-152, August.
    6. AfDB AfDB, 2007. "Working Paper 92 - Education Expenditures and School Enrolment in Africa: Illustrations from Nigeria and Other SANE Countries," Working Paper Series 2225, African Development Bank.
    7. Clovis Freire & Nobuko Kajiura, "undated". "Impact of Health Expenditure on Achieving the Health-related MDGs," MPDD Working Paper Series WP/11/19, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    8. Bourguignon, Francois & Diaz-Bonilla, Carolina & Lofgren, Hans, 2008. "Aid, service delivery, and the millennium development goals in an economy-wide framework," Policy Research Working Paper Series 4683, The World Bank.
    9. repec:spr:hecrev:v:7:y:2017:i:1:d:10.1186_s13561-017-0159-1 is not listed on IDEAS
    10. Agénor, Pierre-Richard & Canuto, Otaviano & da Silva, Luiz Pereira, 2014. "On gender and growth: The role of intergenerational health externalities and women's occupational constraints," Structural Change and Economic Dynamics, Elsevier, vol. 30(C), pages 132-147.
    11. Eunji Kim & Yoonhee Ha & Sangheon Kim, 2017. "Public Debt, Corruption and Sustainable Economic Growth," Sustainability, MDPI, Open Access Journal, vol. 9(3), pages 1-30, March.
    12. Marta C. N. Simões & Adelaide P. S. Duarte & João Sousa Andrade, 2015. "Social Spending, Inequality and Growth in Times of Austerity: Insights from Portugal," GEMF Working Papers 2015-16, GEMF, Faculty of Economics, University of Coimbra.
    13. Agenor, Pierre-Richard & Moreno-Dodson, Blanca, 2006. "Public infrastructure and growth : new channels and policy implications," Policy Research Working Paper Series 4064, The World Bank.
    14. Moira V. Faul, 2016. "Networks and Power: Why Networks are Hierarchical Not Flat and What Can Be Done About It," Global Policy, London School of Economics and Political Science, vol. 7(2), pages 185-197, May.
    15. Guironnet Jean-Pascal, 2009. "Technological Catch-up and Scale Effect in OECD Countries: A Bipolarized Growth Convergence," Working Papers 09-05, Association Française de Cliométrie (AFC).
    16. Marta Simões & Adelaide Duarte & João Sousa Andrade, 2014. "Assessing the Impact of the Welfare State on Economic Growth: A Survey of Recent Developments," GEMF Working Papers 2014-20, GEMF, Faculty of Economics, University of Coimbra.
    17. Emilio Sacerdoti & Gonzalo Salinas & Abdikarim Farah, 2009. "The Macroeconomic Impact of Scaled-Up Aid; The Case of Niger," IMF Working Papers 09/36, International Monetary Fund.
    18. AfDB AfDB, 2007. "Working Paper 92 - Education Expenditures and School Enrolment in Africa: Illustrations from Nigeria and Other SANE Countries," Working Paper Series 2305, African Development Bank.
    19. Sanjeev Gupta & Catherine A Pattillo & Kevin J Carey, 2005. "Sustaining Growth Accelerations and Pro-Poor Growth in Africa," IMF Working Papers 05/195, International Monetary Fund.

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    Keywords

    Economic growth; Human capital; Social policy; Social Spending; MDGs; equation; child mortality; equations; child survival; mortality rate;

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