Abstract
It is often argued that democratic governments interfere with economic growth by attempting to satisfy electoral coalitions through the public policy process. Yet it is quite plausible that different public policies affect economic growth in very different ways, some encouraging growth and others promoting stagnation. This paper analyzes the relationship between state expenditure policies and subsequent economic growth during the period 1964-1984, concluding (1) that the overall size of the state public sector is not implicated in economic decline, and (2) that some policies, primarily welfare and health expenditures, are associated with decline, while others, particularly local expenditures, seem to promote growth.
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