Private Sector Investment Research Articles

Türk Savunma Sanayisinin Dönüşümünün Türk Dış Politikasına Etkileri

Türkiye aims to attain self-sufficiency with the transformation of its defense industry by state-centered and private sector investments as collaboration in the last decade. This paper presents new evidence on the effects of Turkish defense industry’s transformation on Turkish foreign policy by analysing the role of private defense sectors collaborated with the state institutions that are innovative and competitive as in today’s global environment. The main purpose of the article is to verify the claim that the developed, nationalized and localized Turkish defense industry is instrumental in taking more confident steps in Turkish foreign policy. Türkiye has been in a defense transformation since the early 2000s by focusing on a self-reliant and techno-nationalist model by allocating national security resources with the awareness of today’s world conflicts on energy, defense, security, and the experience of Cyprus crisis of 1974 and the ongoing fight against terrorism in a historical perspective. This geopolitical and strategic status of Türkiye and the resilience of Turkish defense industry have also emerged opportunities and challenges for Turkish foreign policy. Furthermore, it is observed that the transformation of Turkish defense industry has presented political and economic commitments for the future. The paper also sheds light on Türkiye’s allocation national resources and collaboration with especially private sector in the transformation process. As a result, in this article, it is concluded that Türkiye's increasing its military presence beyond its borders by exporting national weapons, active operations, military bases and peacekeeping missions means that it has adopted an active and assertive foreign policy. Qualitative research method has been used to reach this result together with primary and secondary sources. Information has been obtained directly from the websites of companies such as Roketsan, Havelsan, Baykar technology, STM, BMC. The defense article of İsmail Demir, President of the National Defense Industry of Türkiye, and the studies of researchers who wrote academic articles about the Turkish defense industry such as Sezgin, Seren, Adar, Yeşiltaş, Sekine, Öniş and Sakman have been referred. Apart from these, the DefeseNews website, which provides annual updated lists of the world's most powerful defense companies, has laso been used.

Empirical Evidence of Environmental Technologies, Renewable Energy and Tourism to Minimize the Environmental Damages: Implication of Advanced Panel Analysis

The motivation behind this research is to investigate the determinants of the ecological footprint in MENA countries and find appropriate solutions. We updated the STIRPAT model and applied sophisticated panel techniques to data from 1996 to 2020. According to the findings, economic expansion along with urbanization and tourism is to blame for these countries' huge environmental footprints. In addition, when it comes to environmental degradation remedies, environmental innovation and the use of renewable energy play an important role in minimizing these environmental externalities. The results of post Saudi Vison 2030 analysis confirmed the significance of urban population and renewable energy in minimizing the environmental footprint. In light of the findings, it is advised that policymakers should revise the legislative framework to attract not only private sector investment, but also foreign investment to utilize the full potential of renewable energy generation.

Identification and Prioritization of Tourism Development Strategies Using SWOT, QSPM, and AHP: A Case Study of Changbai Mountain in China

This research was conducted with the objective of identifying and ranking the tourism sector development strategies for the Changbai Mountain. The SWOT approach was used to construct strategies and the QSPM matrix and AHP method were employed to rank selected strategies. A questionnaire and the Delphi technique were used to collect and analyze research data from forty specialists. The effectiveness of 16 internal factors and 12 external factors in the business region was assessed. According to the results obtained, “Existence of beautiful natural features with distinctive scenery” is the most significant strength of Changbai Mountain. Also, “Inadequate amenities and weakness of infrastructure construction” has been established as the most significant weakness. The term “Adapting the development of the region to the national strategy” is among the most significant external opportunities. Additionally, the “islanding phenomenon” is one of the most significant threats. Sixteen plans were recommended for the growth of the Changbai Mountain’s tourism business. On the basis of the matrix of internal–external components in the SWOT model, an offensive strategy was identified as the optimal approach. We used the combined SWOT-AHP model with 4 criteria and 28 sub-criteria to determine the optimum strategy in the second model, and offensive methods were given the highest priority. The results showed that the “Taking advantage of the natural, historical potentials, etc.” and “Establishing an appropriate mechanism for public and private sector investment” strategies are the most crucial for improving the condition in Changbai Mountain. Therefore, special consideration should be given to the tourism potential in this region, and it should be placed on the agenda of managers and planners in order to strengthen the tourism industry, the region’s economic status, and create employment opportunities.

Optimal sizing of residential photovoltaic and battery system connected to the power grid based on the cost of energy and peak load

The use of renewable energy is necessary to achieve the goals of sustainable development, and sooner or later all countries are forced to plan and make policies for the use of this equipment. Considering the growing trend of smart systems and the ability of these systems to control and use renewable resources, it is necessary to investigate how to control and optimally use these resources in smart systems. Considering the geographical conditions and significant solar energy radiation in Iran, the most suitable option for using renewable energy in residential buildings is solar energy. Among the types of solar energy used around the world, photovoltaic panels are used more due to their wide range, being cheaper than other sources of electric power from solar energy and more durable than other sources. In order to reduce widespread losses and reduce the cost of transmission and distribution, increase efficiency, the possibility of the presence of private sector investors and increase the security and stability of the power grid, distributed production of electrical energy at consumption locations using small-scale units is the most cost-effective way to use home solar panels. Also, the production of energy from wind turbines can be done in the areas where anemometer data determine it to be suitable. The combination of solar energy and wind energy can effectively reduce the need for batteries, but studies show that this combination is only economically viable when it is used on a large scale and with high powers, which requires a lot of investment. Large initial capital is one of the biggest problems of distributed production systems, so the use of artificial intelligence methods for accurate capacity determination of renewable energy production systems becomes doubly important. The economic results show that the least cost of electricity and net price cost are 0.44 $ per kWh and 15.0 million $ respectively, when the converter size was gradually changed, with a renewable fraction of 46.7%.

Industrial Policies, Manufacturing Sector Development and Macroeconomic Stability in Nigeria

The primary focus of this study is on policy determination of industrialization and manufacturing, and the latter’s impact on macroeconomic stability in Nigeria.  Since independence, Nigeria’s potential of becoming a global economic giant has been wasted away due to lack of diversification and sluggish manufacturing sector. Government appears to be both the problem and solution to Nigeria’s industrialization. Qualitative and quantitative analysis were applied involving primary and secondary time series data. Questionnaire survey and multiple regression analysis (ARCH) were adopted. The model of manufacturing cannot be complete until political will becomes a major variable/determinant. The survey attributed 32 percent of industrial failure to political factor and lack of political will. This is why Nigeria has not been successful in facilitating industrial transformation, despite the rich endowment. The maximum political commitment to propel industrialization has been absent. Industrialization and manufacturing is state-led through policies and interventions, actualized by private sector investments. Domestic manufacturers invest capital to provide alternative infrastructure for their operations. Consequently, they bear prohibitive costs which result in loss of competitiveness and profitability in the domestic and foreign markets. This is enough dis-incentive to manufacture. It becomes cheaper for them to import from Asia and Europe to repackage and retail. It is a macroeconomic damage that most of Nigeria’s entrepreneurs are merely hawkers of foreign goods for foreign manufacturers, where capital is repatriated in a vicious cycle on daily basis, leaving Nigeria poor and the economy sick. This study recommends strict policy implementation, promotion of home-grown technology by investing in education, skills acquisition, research and development and also bargaining with foreign firms to enable technology transfer. Expansionary monetary and fiscal policies, tariff and exchange rate policies to boost domestic manufacturing, domestic demand and export promotion. The study finally concludes that Nigeria can industrialize with aggressive expansion of domestic markets for goods locally manufactured.  

Does Public Debt and Investments Create Crowding-out Effect in Turkey? Evidence from ARDL Approach

The impact of public sector debt composition on the private sector is a matter of curiosity. This article explores the crowding-out effect of public debt and public investment on private investment in Turkey from 1975 to 2020, utilising the ARDL method. The findings reveal that public investment, public domestic debt stock, and external debt service create a crowding-out effect; on the other hand, the public external debt stock has a crowding-in effect on private sector investments. In this study, the crowding-out effect of public debt, which has not been directly related to private sector investments in the literature, is tried to be examined.

Correlation of Green School indicators with the quality of life of female students of first secondary schools in Yazd city in the academic semester of 2021-2020

Introduction: Considering the role of green schools in maintaining the health of the environment, optimizing energy consumption, increasing the quality of indoor spaces, reducing pollution and promoting learning in students and that another aspect of the quality of life related to the health of adolescents is the school environment, in this study We investigated the level of compliance of girls' first secondary schools in Yazd city with the indicators of green schools and its relationship with the quality of life of students.
 Methods: The design of this study is descriptive-cross-sectional which was carried out in 2020 and its sampling was done in a two-stage cluster by randomly selecting 11 schools in the first district and 13 schools in the second education district and then randomly selecting 11 students from each school. (264 students) and Anderson and Brook (2000) quality of life questionnaire was distributed electronically among students. And the questionnaire of green schools, some of the questions of which were evaluated by observation and by the researcher, and in some other school officials and teachers were asked to answer the questions based on the information they have about their school. The data was analyzed by SPSS software version 23 and the significance level was considered less than 0.05.
 Results: The results of the independent t-test showed that the overall quality of life score has no statistically significant difference with the grade of the green school (p-value=0.722), and in general, the average score of the dimension of negative emotions from the dimensions of the quality of life has a statistically significant difference with the grade of the green school. has (p-value = 0.033). Also, the average score of the emotions dimension of the dimensions of quality of life was higher in grade 2 green schools compared to grade 3 green schools. Considering this point, it is necessary to pay special attention to grade 3 green schools.
 Conclusion: According to the results, the green rating of schools helps to improve the dimension of negative emotions from the dimensions of quality of life, so it is suggested that by taking advantage of private sector investment, support and government policies, it can improve the green rating of schools and improve the quality of life of students

Barriers to Attracting Private Sector Investment in Public Road Infrastructure Projects in the Developing Country of Iran

Private sector investment, the mainstream financing method for procuring public road transport development projects, has encountered several profound difficulties and risks during execution, particularly in developing countries. However, there needs to be more extensive investigations on the major barriers facing road transport infrastructure projects in these countries. In this vein, the present study aims to identify and assess the perceived barriers inhibiting private sector investment in delivering public road transport infrastructure projects in the developing country of Iran. The research method adopted is based on a descriptive survey with a three-round Delphi technique with 35 experts from both the private and public sector in Iran. According to the research study results, four main groups of legal and organizational, political, economic, and operational barriers have been found to significantly impact the attraction of private sector investment in such projects. The three most significant obstacles for public road transport infrastructure projects in developing countries include: (i) a lack of financial and investment safety; (ii) a lack of proficient managers and policies of public organizations in order to facilitate the process of privatization; and (iii) corruption in the privatization process. The survey findings can help the government and policymakers to eliminate or alleviate the potential barriers towards private sector participation in future public road infrastructure projects, particularly in those developing countries such as Iran.

An autoregressive distributed lagged (ARDL) bound testing approach to electricity supply and electricity tariff in Nigeria

The paper empirically employed the Autoregressive Distributed Lagged (ARDL) Bound Test Approach to evaluate data acquired from the CBN Statistical Bulletin, NBS, MYTO-2015 Distribution Tariffs, NERC, PHCN, NEPA, and WB/WDI Database from 1971 to 2021. The ARDL result estimate indicates that in the short and long run electricity supplies is consequential but no influence on electricity tariff and gross domestic product. This indicates that when electricity supplies grow, so does electricity tariff and gross domestic product; however, the gain is not statistically significant. Long-run and short–run electricity supply has not favor and no influence on per capita income. This suggests that as electricity supply increase, per capita income declines. The ECM coefficient, which represents the disequilibrium, is adjusted and brought back to equilibrium at a rate of 22.9% the next year. The R2 of around (77.9%) percent and the adj-R2 of about (74.4%) percent indicated that the model fit well since these levels of total variations in power supply were explained by changes in the explanatory variables. We concluded that it is essential for the development of the Nigerian electricity supply business to have a tariff that would balance the interaction between electricity supply and electricity tariffs while also ensuring a margin of returns on investment. This study recommends that Federal Government of Nigeria should spend extensively in the transmission subsector of the Nigerian Electricity Supply Industry (NESI) to increase its efficiency. In addition, private sector investment in electricity should be encouraged, as industry predictions for the next decade show a favorable trend, coupled with continuous macroeconomic progress.

Governing aid coordination in regional platforms: the G20 Compact with Africa case

The diversity and increasing number of development actors is a factor of complexity for recipient countries that puts at risk the efficiency of assistance delivery and undermines country ownership. The G20 Leaders have called on the international community to promote country platforms, owned by governments, to foster coordination among development partners and mobilize private investments. The objective of this study is to analyse the coordination exercise of the G20 Compact with Africa, a regional platform initiated under the Germany G20 Presidency in 2017, in line with its mandate to leverage private financing. In particular, we will investigate how the international community pursues common goals in the sectors of operations under the Compact with Africa and how Compact's countries structure their national development and sectoral strategies in synergy with development partners. The analysis will be triangulated through a documentary analysis and semi-structured interviews to assess how country platforms can contribute to promoting a coordinated approach among development partners in the definition of government priorities and attract private sector investments. Points for practitioners The implications of this work emphasize that country platforms can act as a vehicle to harmonize, monitor, and narrow the number of development priorities in a country. For this mechanism to be effective, country leadership and ownership should be inclusive of all development partners and in line with governments’ needs and targets.

Development of innovative infrastructure of the industrial sector

The development of innovative infrastructure within the industrial sector is a crucial factor for fostering economic growth, enhancing competitiveness, and ensuring long-term sustainability. This abstract provides an overview of the key aspects and significance of this topic. In an era characterized by rapid technological advancements and increasing globalization, industries are continually evolving. The traditional industrial landscape is transforming into a more dynamic and interconnected environment. As a result, the establishment of an innovative infrastructure is essential for adapting to these changes and harnessing their potential benefits. This abstract outlines some of the critical components of innovative industrial infrastructure, including advanced manufacturing technologies, research and development facilities, efficient supply chain systems, and collaborative networks. These elements collectively contribute to the creation of a thriving ecosystem for industrial innovation. Moreover, the abstract highlights the role of government policies, private sector investments, and academic institutions in driving the development of innovative infrastructure. Collaboration among these stakeholders is essential to creating an environment conducive to research, innovation, and technology transfer.

Public Spending and Private Sector Investment: An investigation of the Crowding-in (or-out) Effect amidst deteriorating Fiscal Balance

Public Spending and Private Sector Investment: An investigation of the Crowding-in (or-out) Effect amidst deteriorating Fiscal Balance

АНАЛІЗ НАСЛІДКІВ ВІЙНИ ДЛЯ ЕКОНОМІКИ УКРАЇНИ

The purposeful destruction and destruction of important large industrial, infrastructural, and logistical facilities of civilian and military importance has become one of the key tactical goals of military aggression by the Russian Federation in relation to Ukraine, which is manifested in the constant massive rocket and air strikes on these objects, persistent attempts to seize industrial cities in the east of the country. This tactic of the occupiers is aimed at quick undermining the country's economic potential and depriving it of its ability to resist aggression effectively and for a long time. In addition, it pursues the goal of creating a humanitarian disaster, since enterprises whose activities are directly related to the livelihood of civilians are subject to destruction the population of cities and the country in general. Ukraine's economy has suffered significant losses since the beginning of the war. The article analyzes losses by sector of the Ukrainian economy after a year of full-scale invasion. The structure of losses by the most affected regions of Ukraine was studied. The amount of necessary funds for restoration and reconstruction by economic sectors and regions of the country was analyzed. The main actions of the government of Ukraine to restore the economy and the need to achieve the goals are considered. Ways of cooperation with international partners to cover general assessment needs in the process of recovery of Ukraine's economy were explored, the role of international financial organizations was considered. Attention was drawn to the fact that private sector investments will play a decisive role in overcoming the consequences of the war and post-war reconstruction. The development of relevant priority sectors and industries should take place with the active participation of the state on the basis of implementation concepts of modern state entrepreneurship. Based on the listed strategic priorities of the country's development, sectoral priorities should be determined for the anticipatory development of certain branches and industries with providing appropriate state aid both for research and development and for the organization of production.

Local Manufacture of Pharmaceutical Commodities in Sub- Saharan Africa: An Empirical Literature Review

This is a literature review that entails prioritised areas of research in order to unpack local/regional manufacture of pharmaceutical commodities in sub-Saharan Africa. The specific objectives of the study shall entail: establishing the key research questions that need to be asked to inform governments if they want to develop their local manufacturing capability; determining the key research questions that need to be asked by regional bodies if they want to develop regional manufacturing capability; establishing the steps that governments should take if they want to develop their local manufacturing capability/industry; determining key considerations for regional bodies as they develop regional manufacturing capability; and, developing a prioritised research framework of key considerations for governments and regional bodies as they develop local manufacturing capability. The research output is expected to be a comprehensive knowledge repository for governments, regional bodies and private sector investors with interests in local/regional manufacture of pharmaceutical commodities in sub-Saharan Africa. The establishment of regional manufacturing hubs in Eastern, Western, Central and Southern African regions is highly recommended. This hubs could begin with pharmaceutical commodities such as tablets, capsules and general antibiotics with emphasis on importation of APIs.

Stimulating Private Investment in Public Infrastructure Through Reform of the Nigerian Legal Environment

A massive infrastructure deficit seriously impedes business growth and economic progress in Nigeria. Given the current fiscal realities, it is apparent that the government cannot solely bankroll such infrastructure requirements. Therefore, the need for private sector involvement in infrastructure development cannot be over-emphasised. However, this paper contends that gaps in infrastructure-related laws are partly responsible for the failure to attract private sector investment into Nigeria’s infrastructure sector. In this regard, the paper seeks to investigate those legal impediments hobbling private sector participation in financing public infrastructure in Nigeria and what reforms, if any, should be made to stimulate private capital flows into the sector. Furthermore, it is argued that attracting private capital into the infrastructure sector requires, among other things, a favourable legal and regulatory environment that is rules-based, transparent, and predictable. It is therefore concluded that private resources could be unlocked by reviewing and improving appropriate infrastructure-related aspects of the country’s legal environment. This article adopts a doctrinal approach; hence, it is based on desktop and library-based or non-empirical research. As doctrinal research, it will rely on an analysis of existing literature on the subject under investigation.

Accelerating Vaccine Innovation for Emerging Infectious Diseases via Parallel Discovery

The COVID-19 pandemic has raised awareness about the global imperative to develop and stockpile vaccines against future outbreaks of emerging infectious diseases (EIDs). Prior to the pandemic, vaccine development for EIDs was stagnant, largely due to the lack of financial incentives for pharmaceutical firms to invest in vaccine research and development (R&D). This R&D requires significant capital investment, most notably in conducting clinical trials, but vaccines generate much less profit for pharmaceutical firms compared with other therapeutics in disease areas such as oncology. The portfolio approach of financing drug development has been proposed as a financial innovation to improve the risk/return trade-off of investment in drug development projects through the use of diversification and securitization. By investing in a sizable and well-diversified portfolio of novel drug candidates, and issuing equity and securitized debt based on this portfolio, the financial performance of such a biomedical “megafund” can attract a wider group of private-sector investors. To analyze the viability of the portfolio approach in expediting vaccine development against EIDs, we simulate the financial performance of a hypothetical vaccine megafund consisting of 120 messenger RNA (mRNA) vaccine candidates in the preclinical stage, which target 11 EIDs, including a hypothetical “disease X” that may be responsible for the next pandemic. We calibrate the simulation parameters with input from domain experts in mRNA technology and an extensive literature review and find that this vaccine portfolio will generate an average annualized return on investment of −6.0% per annum and a negative net present value of −$9.5 billion, despite the scientific advantages of mRNA technology and the financial benefits of diversification. We also show that clinical trial costs account for 94% of the total investment; vaccine manufacturing costs account for only 6%. The most important factor of the megafund’s financial performance is the price per vaccine dose. Other factors, such as the increased probability of success due to mRNA technology, the size of the megafund portfolio, and the possibility of conducting human challenge trials, do not significantly improve its financial performance. Our analysis indicates that continued collaboration between government agencies and the private sector will be necessary if the goal is to create a sustainable business model and robust vaccine ecosystem for addressing future pandemics.

A Structural Equation Model (SEM) of Leading Factors Influencing the Quality of Sustainable Development: A Case Study in the Southern Province of Sri Lanka

The Sri Lanka government which assumed office in 1977 embarked on economic liberalization reforms. The main thrust of the liberalized economic reforms has been to standardize private sector investment by providing infrastructure facilities through public investment with the aim of achieving high economic growth and employment levels. All these efforts were not as successful as the expected level since some policies were implemented without appropriate prior examinations. With the objective to fulfill the targets of sustainable development in a county, there should be equal distribution of the benefit of the development among the people. Thus, decentralization could be identified as the path to enhancing sustainable development. On this basis, the study makes an effort to offer government officials and decision-makers insights to better comprehend and raise the caliber of sustainable development in the area, as well as to bridge the knowledge gap. The suggested model is experimentally evaluated using data analysis from 1000 survey units representing all divisional secretariats' divisions in Sri Lanka's Southern region using a two-stage systematic sampling technique and the structural equation modeling method using the R tool. The findings demonstrate a strong and positive relationship between the constructions of the scales of economic, social, human, and environmental development and the quality of sustainable development. The findings of this study provide government officials and decision-makers in Sri Lanka, in particular, with valuable recommendations for understanding how various elements impact the execution of the quality of sustainable development.

Glocal woodlands – The rescaling of forest governance in Scotland

As a response to global crises of climate change and biodiversity loss, the UN has called for restoring a billion hectares of land. In recognition, both governments and the private sector have pledged to restore landscapes through planting millions of hectares of forests. Private sector investment is to play a critical role in meeting these goals, through instruments such as biodiversity offsetting, philanthropy, voluntary carbon markets, sustainability funds, and climate bonds. Such instruments allow for the value of place-based ecosystems, such as standing forests, to be circulated globally. No longer are forests horizontal (in terms of their extent on a map); they are also vertical, in terms of their entanglements with institutions, and actors, operating at various scales. An overarching emphasis on the private sector however obscures the role of state institutions in engaging these multi-scalar institutions and actors. Bringing the dimension of scale to tree planting, we examine the ways in which woodland creation, a ‘national’ policy priority for the Scottish government, brings together actors, both ‘local’ and ‘global’, in an unequal context. Our analysis uncovers that in retreating from directly creating and managing woodlands to playing a supportive regulatory role, Scottish Government’s forest policies increasingly rescale forest and landscape governance to private and non-profit sectors, and to individual landowners and communities. These actors, who are differently endowed in terms of resources, participate in forestry developments on an uneven playing field. Moreover, questions around power and distribution of benefits arise as woodland expansion increasingly becomes part of green investment portfolios, environmental, social, and corporate governance (ESG) commitments, offsetting, and individual philanthropy. A relational view of scale that examines prevailing relations of power and resources in given socio-political contexts can both animate and inform current discourses and policies on tree planting for climate change mitigation.

The Determinants of Private Fixed Investment and the Relationship between Public and Private Capital Accumulation in Turkey

The purpose of this study is to analyse the determinants of private fixed investment spending in Turkey over the period 1970-96, which covers years of both financial repression and financial liberalisation. A reformulated neoclassical investment model and a reformulated flexible accelerator investment model have been tested for the Turkish economy. The results obtained support the accelerator principle and the crowding out hypothesis, that is, public and private sector investments have been found to be substitutes. Furthermore, the hypothesis that the volume of funds is as important as the cost of funds used in financing private fixed investment has been verified. On the other hand, the so-called McKinnon-Shaw hypothesis has not been completely verified because the effect of the medium-term real lending rate on private fixed investment has been found to be negative but statistically insignificant. Finally, the financial and liberalisation programmes that have been implemented since 1983 have not yet shown any noticeable positive effects on private investment.

Social spending and chronic unemployment: evidence from OECD countries

PurposeSocial spending is at the forefront of the tools used to repair the damage caused by the global epidemic. However, one of the most critical questions in recent days is as follows: what are the effects of social expenditures in eliminating unemployment? The primary purpose of this article is to provide empirical evidence on the impact of social spending on chronic unemployment in the selected organization for economic co-operation and development (OECD) countries.Design/methodology/approachIn this study, the data of 30 selected OECD countries between 1991 and 2018 have been compiled. First, countries have been divided into four categories according to their spending intensity to determine the effects of social spending on the long-term unemployment rate. Then, the auto-regressive distributed lag (ARDL) approach and the error correction models (ECM) examine the variables' short- and long-term interactions.FindingsThe author found that the change in the share of social expenditures in GDP affects chronic unemployment similarly. This finding is consistent with the results of studies in the literature dealing with the relationship between public sector size and unemployment. However, the research findings are specifically about the effects of social expenditures on chronic unemployment. In this respect, the results reflect that expenditures with passive characteristics have an expansionary effect on long-term unemployment. In addition, the progressive effect of social expenditures on chronic unemployment is increasing in countries with high expenditure intensity. In countries with relatively low spending intensity, the impact of social spending is limited to the short run and is lower.Originality/valueMultiple studies have reported that public policies developed in line with the incentives of active employment and public or private sector investments reduce the unemployment rate by positively affecting the output/employment level. This study, unlike other studies, focuses on the effects of social expenditures on chronic unemployment. It also compares the effects of social spending on the long-term unemployment rate for countries with varying spending intensities. Therefore, this article tests the impact of social expenditures used against a concrete socioeconomic problem in the OECD sample. In this respect, the findings contribute to the literature by addressing the relationship between social spending and chronic unemployment.