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Government Spending (Ortiz-Ospina & Roser)

Government Spending by Esteban Ortiz-Ospina and Max Roser published by Our World in Data (2022)

Public spending enables governments to produce and purchase goods and services, in order to fulfil their objectives – such as the provision of public goods or the redistribution of resources. In this entry we study public spending through the lens of aggregate cross-country data on government expenditures. We begin with an analysis of historical trends, and then move on to analyze recent developments in public spending patterns around the world.

The available long-run data shows that the role and size of governments around the world has changed drastically in the last couple of centuries. In early-industrilized countries, specifically, the historical data shows that public spending increased remarkably in the 20th century, as governments started spending more resources on social protection, education and healthcare.

Recent data on public spending reveals substantial cross-country heterogeneity. Relative to low-income countries, government expenditure in high-income countries tends to be much larger (both in per capita terms, and as share of GDP), and it also tends to be more focused on social protection.

Recent data on public spending also shows that governments around the world often rely on the private sector to produce and manage goods and services. And public-private partnerships (PPP), in particular, have become an increasingly popular mechanism for governments to finance, design, build and operate infrastructure projects. In the period 2005-2010 alone, the total value of PPP projects in low and middle-income countries more than doubled.

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