Welfare Spending and Quality of Growth in Developing Countries: Evidence from Hopefuls, Contenders and Best Performers

African Governance and Development Institute WP/15/022

20 Pages Posted: 27 Jun 2015

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Date Written: June 26, 2015

Abstract

The transition from the Millennium Development Goals (MDGs) to Sustainable Development Goals (SDGs) has shifted the policy debate from growth to ‘quality of growth’ (QG). The April 2015 World Bank publication on MDGs extreme poverty targets has revealed that poverty has been decreasing in all regions of the world with the exception of Sub-Saharan Africa (SSA). We explore a new dataset on QG by the IMF and classify 93 developing countries for the period 1990-2011 in terms of Hopefuls, Contenders and Best Performers. Preliminary findings reveal that 31 of the 33 countries in the Hopefuls category are in SSA. We build on stylized facts depicting the contradiction between high-growth and poor social welfare, and assess the determinants of education and health spending on the QG using quantile regressions to articulate least and best QG performers. The following findings are established. First, on average, the effect of health (education) is decreasingly (increasingly) positive from Hopefuls to Best Performers. Second, on within categories: (1) health spending has positive threshold effects with decreasing magnitude among Hopefuls (0.10th to 0.30th quantiles) and Contenders (0.40th to 0.60th quantile), and positive effects with increasing magnitude among Best Performers (0.10th to 0.90th quantile) and (2) education spending has positive inverted U-shaped effects among Hopefuls and Contenders and positive U-shaped effects among Best Performers. Policy implications are discussed.

Keywords: Quality of growth; Development; Education; Health

JEL Classification: O40; O57; I10; I20; I32

Suggested Citation

Asongu, Simplice, Welfare Spending and Quality of Growth in Developing Countries: Evidence from Hopefuls, Contenders and Best Performers (June 26, 2015). African Governance and Development Institute WP/15/022. Available at SSRN: https://ssrn.com/abstract=2623458 or http://dx.doi.org/10.2139/ssrn.2623458

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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