Sunday, March 20, 2011

Government Spending as Percent of GDP

Since I found the data figured I'd post it.  Pretty much the same comments as the taxation figures.  Government expenditure is even messier than tax expenditure, I guess I'm used to seeing smoothed charts.  Unfortunately the data set isn't as good, several states start late in the series, though oddly enough Korea starts earlier.  In any case, there's a sharp spike for the current recession but the same kind of flattening of spending occurs as with taxation, though it's a little harder to see and looks less clustered.  Korea is the only country with a clearly rising government expenditure, but that's expected.  Sweden breaks 70% spending and Finland breaks 60%, though neither of them maintains it for long.  I assume this is due to a recession and counter cyclical spending, but am too lazy to do the research to check for temporary blips.  On this chart we get a few countries whose spending settled above 50% (though Sweden's data series is so short and noisy I can't say they look like they've settled into anything), Belgium, France, Austria, Denmark, Sweden, and Finland (France's curve looks like it still may have a slight upward slope, probably because they have completely unsustainable labor practices, and Belgium just barely makes the cut).

For the most part though, spending seems to become basically flat between 40 and 50% of GDP in most cases, and this has been stable for some time.  Unfortunately this data set only begins in 1970 so it leaves out the years that experience rapid growth of government.  If the curve had been there it would be more obvious how much leveling out there is post 1980 (and from the chart a leveling out that proceeded somewhat messily between 1980 and 1990) for many countries compared to the rapid rise of the state in the 50s and 60s, though the tail end of this is visible in the 70s for the few countries the data is present for (I especially regret not having Spain which started so much less developed and caught up).  Korea appears to be the only state that remains on a clear upward trajectory, while all countries show a recent spike this is to be expected due to the shrinking of the economy in the recession, and judging from the sharp spikes and recoveries common before there is no reason to think this will be sustained.

[Unfortunately I haven't found a good way to put graphics of this size into the blog yet.  I may eventually find a way for now it should be enlargeable in your browser or you can get the OECD data directly.  It's much clearer in Openoffice where I can highlight individual lines.]


  1. My thumbnail takeaway is that growth matters more to the relative size of the state than policy.

  2. Yeah, I definitely agree with that.

    The tough question is how to get per capita GDP growth. State spending certainly seems to be going up as a percentage of GDP when growth is at its highest (with the US, Japan, and Australia being outliers, in the US and Japan this is likely due to large corporations fulfilling similar roles to the state in other nations, Australia I've become curious about and have no explanation), and then leveling off as growth slows (generally explained as citizen's desiring more public goods as wealth rises, and then eventually topping out as wants are satisfied). So far I haven't found good data on per capita GDP on the OECD site, I actually found this data when looking for that. I'm sure they have it somewhere but while I use the data bases now and then I don't use them frequently enough to find what I'm looking for quickly. Strangely enough, they do have per capita GDP as a percentage of OECD averages, but that is very poor data for my purposes. And I think, a strange way of presenting it in general.

  3. You know, here's a localized thought that's been bouncing around my head for a decade or so. I work in the social services and it may be that as growth increases and more people have more wealth than they expected, demand goes up for philanthropy, some of which is channeled through the state.

  4. Doug,

    I think that's definitely true. I also think part of it is that it's eventually realized that for people to pull themselves out of poverty they need some security for basic needs, so channeling aid through the state ultimately makes sense for a lot of purposes. It's hard to look for a job if you're having to go from charity to charity to get food, shelter, and clothing separately. Much easier if the state just cuts a single welfare check.