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Public spending and outcomes : does governance matter?

  • Rajkumar, Andrew Sunil*Swaroop, Vinaya
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    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 infant mortality 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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    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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    1. Burnside, Craig & Dollar, David, 1997. "Aid, policies, and growth," Policy Research Working Paper Series 1777, The World Bank.
    2. 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.
    3. 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.
    4. Dollar, David & Kraay, Aart, 2001. "Growth is good for the poor," Policy Research Working Paper Series 2587, The World Bank.
    5. 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.
    6. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
    7. 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.
    8. Hanushek, Eric A, 1995. "Interpreting Recent Research on Schooling in Developing Countries," World Bank Research Observer, World Bank Group, vol. 10(2), pages 227-46, August.
    9. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
    10. Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
    11. 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.
    12. David Aschauer, 1988. "Is government spending stimulative?," Staff Memoranda 88-3, Federal Reserve Bank of Chicago.
    13. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Governance matters," Policy Research Working Paper Series 2196, The World Bank.
    14. 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.
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