Social Spending, Human Capital, and Growth in Developing Countries: Implications for Achieving the Mdgs

40 Pages Posted: 9 Feb 2006

See all articles by Emanuele Baldacci

Emanuele Baldacci

International Monetary Fund (IMF) - Fiscal Affairs Department

Benedict Clements

International Monetary Fund (IMF) - African Department

Sanjeev Gupta

International Monetary Fund (IMF) - Fiscal Affairs Department

Qiang Cui

International Monetary Fund (IMF) - Fiscal Affairs Department

Multiple version iconThere are 2 versions of this paper

Date Written: November 2004

Abstract

Using panel data from 120 developing countries from 1975 to 2000, this paper explores the direct and indirect channels linking social spending, human capital, and growth in a system of equations. The paper finds that both education and health spending have a positive and significant direct impact on the accumulation of education and health capital, and thus can lead to higher economic growth. The paper also finds that other policy interventions, such as improving governance, reducing excessive budget deficits, and taming inflation, can also be helpful in moving countries toward the Millennium Development Goals (MDGs). As such, higher spending alone is not sufficient to achieve the MDGs.

Keywords: Economic Growth, Human Capital, Social Spending, MDGs

JEL Classification: I1, I2, O2, O4

Suggested Citation

Baldacci, Emanuele and Clements, Benedict and Gupta, Sanjeev and Cui, Qiang, Social Spending, Human Capital, and Growth in Developing Countries: Implications for Achieving the Mdgs (November 2004). IMF Working Paper No. 04/217, Available at SSRN: https://ssrn.com/abstract=879042

Emanuele Baldacci (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Benedict Clements

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

Sanjeev Gupta

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Qiang Cui

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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