Public Sector Economics For Developing Countries

A discussion of the impact of government revenues and expenditures on economic activity, with special reference to developing countries. Michael Howard raises theoretical and empirical issues relating to the role of the public sector in economic development.

This book is one of the products of the Ninth International Conference of Political Economy (ICOPEC) held in September 2018 at Panteion University with the main theme “10 years after the Great Recession: Orthodox versus Heterodox Economics”. This conference was co-organised by the Faculty of Economics of Marmara University, the Greek Association for Political Economy (GAPE), and the Department of Social Policy of Panteion University. This volume contains eight selected papers that benefited from comments and discussion during the conference and subsequently improved significantly. They analyze the relationship between the public sector and economic development.

This important new book offers fresh insights into the growth of the public sector in advanced and developing economies. The economic causes and consequences of changes in the size of the public sector (especially changes in public expenditure) have fascinated economists from the time of Adam Smith. From the early 1960s, interest has focused particularly on changes in the share of national income devoted to public expenditure. This has exhibited a long-run upward trend since 1945 in almost all OECD countries. Substantial fluctuations over shorter periods have also been observed. Understanding the processes underlying these phenomena is of clear importance for public policy makers, and economists have developed numerous theories attempting to explain them. The major questions of interest are: what 'forces' have been causing the share of public expenditure in GDP to rise over the longer term? Are these forces susceptible to policy? Is the public sector taking an increasing share of 'real' resources? Can government attempts in major OECD countries to control or reduce the size of the public sector in the 1980s and 1990s be sustained? What consequences follow from their success or failure? The Growth of the Public Sector focuses on this important issue and assesses the contribution to current knowledge of different theories including public choice, bureaucracy models, relative price effects and Wagner's Law. It also contains a number of new case studies focusing on specific government activities such as education, health and social security.

The underpinning assumption of public management in the developing world as a process of planned change is increasingly being recognized as unrealistic. In reality, the practice of development management is characterized by processes of mutual adjustment among individuals, agencies, and interest groups that can constrain behaviour, as well as provide incentives for collaborative action. Paradoxes inevitably emerge in policy network practice and design. The ability to manage government departments and operations has become less important than the ability to navigate the complex world of interconnected policy implementation processes. Public sector reform policies and programmes, as a consequence, are a study in the complexities of the institutional and environmental context in which these reforms are pursued. Building on theory and practice, this book argues that advancing the theoretical frontlines of development management research and practice can benefit from developing models based on innovation, collaboration and governance. The themes addressed in Public Sector Reforms in Developing Countries will enable public managers in developing countries cope in uncertain and turbulent environments as they seek optimal fits between their institutional goals and environmental contingencies.

This volume reviews current developments taking place in public sector economics and covers issues in both public expenditure and taxation. Trends in public spending, and their determinants, are reviewed along with recent developments in the public choice perspective and the analysis of the demand for public goods. Taxation issues include the incentive effects of taxation, tax evasion and compliance costs and taxation in developing countries. The book concludes with a discussion of the public sector and income distribution and fiscal federalism. Other topics include privatization and deregulation.

The World Public Sector Report will be published every two years with the intention of reviewing major trends and issues concerning public administration and governance. This inaugural issue of the report considers the process of globalisation and the challenges and opportunities it offers for the role of the public sector in countries around the world. It is increasingly being acknowledged that the State is a key actor in the development process and has a major role to play in making globalisation work for all, for example in alleviating poverty and income inequality, advancing human rights, promoting sustainable development and combating international crime. Issues discussed in the report include: the many facets of globalisation; its impact on the State; reinforcing state institutions and social policies; defining and measuring the size of the State.

This paper is addressed to a broad audience of development professionals who are interested in both the substance of decentralisation issues and their impact on economic development. The paper summarises experience with alternative decentralisation arrangements and suggests a new analytical framework for assessing the impact of such arrangements on the performance of economic development programmes and projects. Consideration of alternative forms of decentralisation reveals the need to clarify and establish priorities among economic and political objectives. The potential for conflict among multiple objectives and the need to assess decentralisation policies in terms of acceptable trade-offs among those objectives summarises the importance of this paper.