Fiscal policy on public social spending and human development in Arab countries Skip to main content

Fiscal policy on public social spending and human development in Arab countries

Symbol: 
E/ESCWA/EDID/2017/Technical Paper.13
Issued in: 
2017

Fiscal policy has a central role in making expenditure choices that improve both social and economic development. Studies in the past have largely examined public expenditure impacts on economic growth, while the studies on public social expenditure have mainly focused on social and human development impacts. However, appropriate social expenditures not only improve human development, but also, they are good investments to boost economic growth albeit the notion of social expenditure varies from country to country. Empirical literature on such rounded analysis is scanty, especially for the Arab region. This paper examines the trends of public social expenditure items and their impact on economic growth and human development indicators, such as mean years of schooling and life expectancy years. We found strong evidence to support the proposition that social expenditure contributes positively to improve growth and human development across the Arab countries. However, right mixture of public social expenditure is important for stronger impact, not just the levels of social expenditure. The results are fairly robust, taking into account the alternative methods of estimation, control variables and for different samples and assumptions.