Public Expenditures, Growth, and Poverty assesses the efficacy of poverty reduction programs in Latin America, Africa, and Asia by synthesizing studies conducted by the International Food Policy Research Institute over the past ten years. Overall, the studies find that investments in agricultural research, infrastructure, and human capital are beneficial in the long term, while food aid and poverty reduction programs have little utility beyond immediately abating hunger and generating short-run income effects. The book develops a conceptual framework for analyzing public expenditures and their short- and long-run impact on poverty through various channels. It surveys spending trends and analyzes the effect of growing public investment on urban and rural poverty through case studies of India, China, Thailand, and Uganda. And it highlights the advantages of directing spending toward public works programs that engage impoverished peoples rather than using the limited aid money on food subsidies and other passive donations. Featuring discussions about the roles of various social safety net programs and a chapter devoted solely to the vexing poverty in sub-Saharan Africa, Public Expenditures, Growth, and Poverty will aid policy makers and encourage further, more analytic study of worldwide poverty reduction programs.

Public expenditures (PE), their sizes, and allocations across sectors, are some of the important instruments for the public sector to contribute toward sustainable development goals (SDGs). However, knowledge gaps remain as to how PEs have actually contributed to key SDG outcomes in the past, including the eradication of poverty and hunger, and the improvement in food and nutrition security in sustainable manners (SDGs 1 and 2). This study aims to partly fill this knowledge gap using the Statistics on Public Expenditures for Economic Development (SPEED data) and various country-level panel data. We find that PEs in different sectors have been significantly associated with key indicators under SDGs 1 and 2. Specifically, greater PEs for agriculture and health sectors have had relatively positive effects on total factor productivity growth in agriculture, reduced consumer food price indices, reduced poverty, reduced stunting, underweight or overweight among children under 5. A greater PE for agriculture has also been weakly associated with enhanced biodiversity. These relationships are observed for a broad class of countries, but somewhat stronger for countries that had been classified as low- or lower-middle-income in 2000. Greater PEs for education and social protection, which have been generally higher than PEs for agriculture and health, have had more mixed effects on these outcomes. While continued analyses are required to better understand the complex linkages between PE and these outcomes, the current study offers useful preliminary insights.

Countries vary systematically with respect to the incentives of politicians to provide broad public goods, and to reduce poverty. Even in developing countries that are democracies, politicians often have incentives to divert resources to political rents, and to private transfers that benefit a few citizens at the expense of many. These distortions can be traced to imperfections in political markets, that are greater in some countries than in others. The authors review the theory, and evidence on the impact of incomplete information of voters, the lack of credibility of political promises, and social polarization on political incentives. They argue that the effects of these imperfections are large, but that their implications are insufficiently integrated into the design of policy reforms aimed at improving the provision of public goods, and reducing poverty.

The Government of Moldova's Economic Growth and Poverty Reduction Strategy Paper (EGPRSP) lays out an ambitious plan for sustaining growth and poverty reduction and reshaping the government to meet the needs of a market economy. The public expenditures envisaged under this ambitious plan, however, vastly exceed the domestic resources available to the Government. Additional foreign budgetary support may help alleviate some of that resource constraint. Recognizing that the share of tax revenues and expenditures to GDP in Moldova already greatly exceed comparable international levels, generating additional domestic tax resources risks crowding out the private sector and undermining growth prospects. This suggests that in order to finance higher order public expenditures priorities, the Government needs to create fiscal space from within the existing resource envelope. This will require inter and intra-sectoral reallocation of expenditures and an increase in the efficiency of public spending rather than increasing the relative size of government.

Whereas there is plenty of work looking at macroeconomic effect of public spending on growth and poverty in Africa as well as studies of the impact of spending or investment in one economic sector on outcomes in that sector or on broader welfare measures, this book fills a much needed gap in the research looking how the composition of public spending affects key development outcomes in the region. The book brings together recent analysis on the trends in, and returns to, public spending for agricultural growth and rural development in Africa. Case studies of selected African countries provide insights on the contributions of different types of public expenditures for poverty, growth and welfare outcomes, as well as insights into the constraints in gaining development mileage from investments in the agricultural sector.

This study examines the likely impact of government expenditure policy on long run growth and poverty, in both rural and urban Nigeria, drawing on insights from research on some sectors in the Nigerian economy on the direct and indirect links between government spending, growth and poverty reduction. The main objective is to simulate if government expenditure in priority areas would help to meet the Millennium Development Goals (MDG) of the United Nations. The study used an integrated sequential dynamic computable general equilibrium (CGE) micro-simulation model to study the potential impact of increasing government expenditure on growth and poverty reduction. The results of experiments indicate that it will be extremely difficult for Nigeria to achieve the Millennium Development Goals (MDG) target, in terms of poverty reduction by the year 2015, because no single policy measure in the analysis is able to meet this goal. This study therefore recommends that in order to promote economic growth and reduce poverty, investment in education and health services should receive the highest priority in the public investment portfolio.

Abstract: This paper presents a small-scale intertemporal model of endogenous growth that accounts for the composition of public expenditure and externalities associated with public capital. Government spending is disaggregated into various components, including maintenance, security, and investment in education, health, and core infrastructure. After studying its long-run properties, the model is calibrated for Haiti, using country-specific information as well as parameter estimates from the literature. A variety of policy experiments are then reported, including a reallocation of spending aimed at creating fiscal space to promote public investment; an improvement in fiscal management that leads to a reduction in tax collection costs; higher spending on security; and a composite fiscal package.

Public expenditures (PE) are critical for key public sector functions that contribute to development and welfare improvements, including the provisions of necessary public goods and the mitigation of market failures. PE in social sectors, such as health, education, and social welfare, and in agriculture have been increasingly recognized as potentially important for income growth, poverty reduction, fostering increased private investment, improved nutritional outcomes, and greater economic resilience. Furthermore, the importance of the impact of subnational PE on these outcomes has also been recognized, as appropriately decentralized PE systems can potentially achieve greater effectiveness by enabling public sector support that is tailored more to local needs. However, direct evidence of these developmental effects of decentralized PE in developing countries like Nigeria has been relatively limited. This study attempts to fill this knowledge gap by estimating the effects of shares of total subnational PE for agriculture, health, education, and social welfare, as well as PE size, on household-level outcomes using nationally-representative panel household data and both local government area and higher state-level PE data for Nigeria. We find that greater shares of total PE for agriculture, health, and social welfare, conditional on PE size, generally have positive effects on consumption, poverty reduction, and non-farm business capital investments. A greater share of total PE for agriculture benefits a broader range of outcomes than do greater shares of total PE for health and social welfare. These include improving certain nutritional outcomes, like household dietary diversity across seasons, and economic flexibility between farm and non-farm activities, which may be particularly important for building resilience in today’s rapidly changing socioeconomic environment due to shocks, including COVID19. Such multi-dimensional benefits of greater PE for agriculture are particularly worthy of attention in countries like Nigeria, which have historically allocated a lower share of total PE to agriculture than to health and other social welfare sectors and a lower share of total PE to agriculture compared to that allocated to agriculture in similar countries in Africa and elsewhere.

For more than a decade, Ethiopia's government has tried to foster economic growth through agricultural development. Given the public expenditures required to achieve this goal and the limited resources available, policymakers need information on how to most effectively allocate those resources. This report provides that information by examining the relative impact that different types of spending have on rural household welfare. The results are surprising: while agricultural productivity plays a critical role in rural welfare, public spending on agriculture does not have as important an effect on productivity as would be expected. The authors find that expenditure in roads is far more effective in improving rural welfare, although its impact can vary across different regions. Public spending on education has more moderate returns than investments in road infrastructure, but these returns are still larger than those from agricultural spending, as well as being more spread out across regions than those from road infrastructure. Through such findings, the report provides policymakers, analysts, and others in the development arena with a guide to shaping future policies and a basis for additional research.