Malaysian government expenditure
Table of contents
GRAPHICAL AND TABULAR REPRESENTATIONS
Introduction
There has been much debate on the role and the size of government interference in the macroeconomic outlook throughout countries. As a result, governments attempt to stimulate economic growth through different instruments. Public expenditure has traditionally been a component of fiscal policy which is an instrument of the State to influence economic growth. Several models of government investment and growth have been designed to investigate the relation between government expenditure and economic growth. However, some debate prevails. To illustrate, studies done by Landau (1986), Barro (1990), Grier and Tullock (1989) reveal a negative relationship between government expenditure and economic growth, while Ram (1986) and Aschauer (1989) disclose a negative relationship.
Furthermore, when evaluating the scope of government expenditure in different regions diverse patterns can be recognized. For instance, study shows that the average share of government expenditure over total GDP of the members of the Organization for Economic Cooperation and Development (OECD) in 1984 amounted to 49.5%1. This is not surprising given that most of these countries are welfare states.
On the contrary, when evaluating government expenditure patterns among Asian developing countries no clear trend can be recognized. This can be partially explained by the diverse assumptions of market forces implemented in these countries. In addition, a variety of government regimes are recognized which reflect the different roles of the State in different Asian developing countries. (Rehman Sobhan, Development Paper No. 13, 1993). The main distinction is that the objective of government expenditure in developing countries is solely focused on economic expansion instead of maintaining the current level of economic wealth.
In addition, some researchers conclude that a significant positive relationship between
GRAPHICAL AND TABULAR REPRESENTATIONS
Introduction
There has been much debate on the role and the size of government interference in the macroeconomic outlook throughout countries. As a result, governments attempt to stimulate economic growth through different instruments. Public expenditure has traditionally been a component of fiscal policy which is an instrument of the State to influence economic growth. Several models of government investment and growth have been designed to investigate the relation between government expenditure and economic growth. However, some debate prevails. To illustrate, studies done by Landau (1986), Barro (1990), Grier and Tullock (1989) reveal a negative relationship between government expenditure and economic growth, while Ram (1986) and Aschauer (1989) disclose a negative relationship.
Furthermore, when evaluating the scope of government expenditure in different regions diverse patterns can be recognized. For instance, study shows that the average share of government expenditure over total GDP of the members of the Organization for Economic Cooperation and Development (OECD) in 1984 amounted to 49.5%1. This is not surprising given that most of these countries are welfare states.
On the contrary, when evaluating government expenditure patterns among Asian developing countries no clear trend can be recognized. This can be partially explained by the diverse assumptions of market forces implemented in these countries. In addition, a variety of government regimes are recognized which reflect the different roles of the State in different Asian developing countries. (Rehman Sobhan, Development Paper No. 13, 1993). The main distinction is that the objective of government expenditure in developing countries is solely focused on economic expansion instead of maintaining the current level of economic wealth.
In addition, some researchers conclude that a significant positive relationship between