Public Expenditure and Economic Growth: A Disaggregated Analysis for Developing Countries

24 Pages Posted: 24 Aug 2007

See all articles by M. Emranul Haque

M. Emranul Haque

University of Manchester - School of Social Sciences

Denise R. Osborn

University of Manchester - School of Social Sciences; University of Tasmania

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

Haque, M. Emranul and Osborn, Denise R., Public Expenditure and Economic Growth: A Disaggregated Analysis for Developing Countries. Manchester School, Vol. 75, No. 5, pp. 533-556, September 2007. Available at SSRN: https://ssrn.com/abstract=1007855 or http://dx.doi.org/10.1111/j.1467-9957.2007.01028.x

M. Emranul Haque

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom
+0161 275 4829 (Phone)

HOME PAGE: http://www.socialsciences.manchester.ac.uk/disciplines/economics/about/staff/

Denise R. Osborn

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

University of Tasmania ( email )

French Street
Sandy Bay
Tasmania, 7250
Australia

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