The Impact of Public Spending on the Human Development Index in the OECD Countries

• Main Authors: Chung-Kang Liu, 劉仲康
• Other Authors: 蘇彩足
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/3fd8s9

碩士 === 國立臺灣大學 === 政治學研究所 === 102 === The impact of the global financial crisis and the European debt crisis was huge and worldwide. For many developed countries, increasing public spending to boost the economy was their approach to deal with the economic crises. However, the move soon led to a bigger issue as fiscal deficit and national debt surged. To address the problem, austerity measures and government spending cuts were carried out. However, the impact of government spending cuts on people’s well-being is a divided debate. Therefore, in this study, we shall look into the impact of public spending in the developed countries and see how it affects people’s lives. In our study, we shall examine the impact of public spending on human development in all 34 OECD (Organisation for Economic Co-operation and Development) countries. The analysis of this study covers an eight-year period, from 2005 to 2012, with the Human Development Index (HDI) and all four of its indicators being the dependent variables, and public spending in the OECD countries the independent variables. The HDI is a composite index developed by the United Nations Development Programme (UNDP) to evaluate the well-being of citizens in each United Nations (UN) country by health, education, and the standard of living. Our findings are as follows. First, our results show that health and social security spending both contribute to the increase in “life expectancy at birth”. Second, we found that the impact of education, social security, and health spending on “expected years of schooling” is significant and positive. While the impact of health and social security spending on “mean years of schooling” is significant and positive, we found the impact of public spending on education to be statistically insignificant. In addition, according to our results, despite that public spending can cause a crowding-out effect when the economy is booming, it plays a stimulus role during economic downturns. Finally, we found the impact of public spending on the HDI to be significant and positive, indicating that public spending is crucial for sustaining human development in the OECD countries. Although austerity measures may seem to be a solution to alleviate the nations’ financial problems, its impact on people’s lives in the long run cannot be overlooked.