Public Size and Economic Development: Application in OECD Countries

Abstract

It is difficult to determine the optimal level of public expenditure volume which is one of the most important indicators of the extent of the state activity in the economy. Although the volume changes from one country to another, generally accepted opinion is to improve the productivity in public expenditures. The objective of the present study was to determine the effect of public expenditures and types of expenses on economic development in OECD countries. Human development index HDI was accepted as the indicator of economic development. Spatial statistical methods were used to analyze dissimilarities between the nations in this study. We analyzed the countries using HDI level in two groups; countries with low HDI score and countries with high HDI score. The hypothesis was that the countries with low HDI levels have more public spending than the countries with high HDI levels. Especially, The United Kingdom, Italy, Chile and Turkey were the most obvious specimens.

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