Optimal Adjustment of the Composition of Public Expenditure in Developing Countries

19 Pages Posted: 1 Jan 2011

See all articles by Tatsuyoshi Miyakoshi

Tatsuyoshi Miyakoshi

Osaka University

Tatsuhito Kono

Tohoku University - Graduate School of Information Sciences

Kota Terasawa

affiliation not provided to SSRN

Date Written: December 2010

Abstract

This paper analyses how the composition of public expenditure should be adjusted to maximize the economic growth rate in developing countries. We first apply a theoretical framework to empirical data from 50 countries. We then demonstrate how each country should adjust public expenditure for the purpose of maximizing growth. Results show that developing countries in Asia, the Middle East and Eastern Europe have generally misallocated public expenditures in favour of defence, at the expense of public services. Other regionā€specific results suggest that Asian developing countries should increase expenditure on education, and that Middle Eastern countries should decrease expenditure on education in favour of health.

Suggested Citation

Miyakoshi, Tatsuyoshi and Kono, Tatsuhito and Terasawa, Kota, Optimal Adjustment of the Composition of Public Expenditure in Developing Countries (December 2010). Pacific Economic Review, Vol. 15, Issue 5, pp. 577-595, 2010, Available at SSRN: https://ssrn.com/abstract=1732934 or http://dx.doi.org/10.1111/j.1468-0106.2010.00518.x

Tatsuyoshi Miyakoshi (Contact Author)

Osaka University ( email )

1-1 Yamadaoka
Suita
Osaka, 565-0871
Japan

Tatsuhito Kono

Tohoku University - Graduate School of Information Sciences ( email )

Aoba 6-3-9
Aoba-ku, Sendai, 980-8579
Japan
81-22-795-4477 (Phone)
81-22-795-4497 (Fax)

HOME PAGE: http://www.se.is.tohoku.ac.jp/~kono/t-kono.html

Kota Terasawa

affiliation not provided to SSRN

No Address Available

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