An Empirical Analysis of the Relation Between Social Spending and Economic Growth in Developing Countries and OECD Members

Abstract

This study examines the economic effects of social spending in less developed nations and compares the situation with that of social spending in developed countries. Currently, research in this feld is limited to developed countries, but there is a need to question the appropriateness of the conclusions of existing studies for developing countries. An analysis of data from developed and developing countries suggests that social spending correlates positively with economic growth in developing countries and negatively with economic growth for developed countries. These results imply that social spending regimes can be instrumental in achieving economic growth in poorer countries.