III. PUBLIC FINANCE AND ECONOMICS 4. General government expenditures

Governments spend money to provide goods and services differences between countries. Between 2000 and 2009, the and redistribute income. Like government revenues, largest increases in government expenditures per person government expenditures reflect historical and current were recorded in Korea, Estonia and Ireland (over 6%) while political decisions but are also highly sensitive to economic in Austria, Italy, Japan and Switzerland the increases were developments. General government spending as a share of equal to or below 1%; and in Israel there was no change. GDP and per person provide an indication of the size of the government across countries. However, the large variation in these ratios highlights different approaches to delivering public goods and services and providing social protection, not necessarily differences in resources spent. For instance, Methodology and definitions if support is given via tax breaks rather than direct Government expenditures data are derived from the expenditures, expenditure/GDP ratios will naturally be OECD National Accounts Statistics, which are based on lower. In addition, it is important to note that the size of the System of National Accounts (SNA), a set of inter- expenditures does not reflect government efficiency or nationally agreed concepts, definitions, classifica- productivity. tions and rules for national accounting. In SNA Government expenditures represented 46% of GDP across terminology, general government consists of central, OECD member countries in 2009. In general, OECD-EU state and local governments and social security member countries have a higher ratio than other OECD funds. member countries. Denmark, Finland and France spend Gross domestic product (GDP) is the standard the most as a share of GDP, with government expenditures measure of the value of the goods and services equal to or above 56%, whereas Mexico, Chile, Korea and produced by a country during a period. Government Switzerland spend the least, with shares between 24% and expenditures per person were calculated by convert- 34% of GDP. ing total government expenditures to USD 2009 using Since 2000, the size of government spending increased in the OECD/Eurostat purchasing power parities (PPP) for the majority of OECD member countries by an average of GDP and dividing by population (for the countries 4.3 percentage points of GDP. Most of this increase occurred whose source is the IMF Economic Outlook an implied since the start of the financial and economic crisis. PPP conversion rate was used). PPP is the number of Between 2000 and 2007, OECD member countries decreased units of country B’s currency needed to purchase the their share of government spending on average by same quantity of goods and services in country A. 0.6 percentage points of GDP. After the start of crisis, the share of government spending increased by 4.9 percentage points across the OECD during 2007-09. Only part of this increase reflects declining GDP; part also reflects increased government expenditures precipitated by the need to ensure Further reading the stability of the financial system and to stimulate the economy in response to the crisis. During 2007-09, the larg- OECD (2011), National Accounts at a Glance 2010, OECD est increases in government expenditures as a share of GDP Publishing, Paris. occurred in Ireland (+12.1 percentage points) and Estonia (+10.8 percentage points), whereas Israel was the only OECD member country that recorded a decrease in the ratio Figure notes (–0.7 percentage points). Data for Australia, Japan, Korea, New Zealand and the Russian Federation The difference in government expenditures per person is are for 2008 rather than 2009. Data for Mexico are for 2003 rather very large between OECD member countries. Luxembourg than 2000. Data for the Russian Federation are for 2002 rather spends almost eleven times more per person than Mexico, than 2000. although expenditures per person in Mexico have been 4.1: Data for 2000 for Turkey and for 2000 and 2007 for Chile are not avail- increasing at an above average pace. Though government able and these countries are not included in the average (OECD32). expenditures per person rose in all OECD member coun- 4.3: Data for Chile and Turkey are not available. tries except Israel since 2000, there have been significant Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

64 GOVERNMENT AT A GLANCE 2011 © OECD 2011 III. PUBLIC FINANCE AND ECONOMICS

4. General government expenditures

4.1 General government expenditures as a percentage of GDP (2000, 2007 and 2009)

% 2009 2007 2000 60

50

40

30

20

10

0 k d n s d y d y n d s g d n d n a r n ce m ria d n r ia n ia n n n ea ia n u t n gal way blic ael ada ur blic key alia r azil rica dia es ma la a eece Italy ga tu r u pai ton sr n tate u tr rla Chile r atio In n n n r wede r us gdomrla rela r rman S s I S eala ur Japa Ko B r Chin Fi F G A n Icela un loven I No E Pola Ca T us Mexico do De S Belgi H S Po Ge OECD32 A th Af n ited xembow Z witze u I n u e S o ited Ki Nethe L N n FedeS n U lovak Rep ia U Czech Rep S uss R

Source: For OECD countries: OECD National Accounts Statistics. For the other major economies (excluding the Russian Federation): International Monetary Fund (2010), Economic Outlook, April 2011, IMF, Washington DC. 1 2 http://dx.doi.org/10.1787/888932389873

4.2 General government expenditures 4.3 Annual real percentage change of general per person (2009) government expenditures per person (2000 to 2009) Luxembourg Korea Norway Estonia Denmark Ireland Netherlands Sweden Poland Austria Mexico Finland Greece Belgium United Kingdom Ireland Czech Republic United States France Iceland Iceland United States United Kingdom Slovenia Germany Hungary Italy Finland Canada Greece Luxembourg OECD34 OECD32 Switzerland Spain Spain New Zealand Australia Netherlands Slovenia Japan Slovak Republic New Zealand Portugal Israel Norway Portugal Belgium Czech Republic Australia Hungary Slovak Republic Canada Estonia France Poland Germany Korea Sweden Turkey Denmark Chile Mexico Austria Italy Russian Federation Japan Brazil Switzerland South Africa Israel China India Indonesia Russian Federation 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 01234 5 678 2009 USD PPP %

Source: For OECD countries: OECD National Accounts Statistics. For the other Source: OECD National Accounts Statistics. major economies (excluding the Russian Federation): International 1 2 http://dx.doi.org/10.1787/888932389911 Monetary Fund (2010), Economic Outlook, April 2011, IMF, Washington DC. 1 2 http://dx.doi.org/10.1787/888932389892

GOVERNMENT AT A GLANCE 2011 © OECD 2011 65 From: Government at a Glance 2011

Access the complete publication at: https://doi.org/10.1787/gov_glance-2011-en

Please cite this chapter as:

OECD (2011), “General government expenditures”, in Government at a Glance 2011, OECD Publishing, Paris.

DOI: https://doi.org/10.1787/gov_glance-2011-10-en

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