Statistics on Public Expenditures for Economic Development

Sam Benin

Nilam Prasai

Yifei Liu

19 May 2016

Outline

• Introduction and analytical content (Sam)o History, data sources & compilation, description

o Global trends in public expenditures

o Findings from third-party analysis

• Access and interactive tool (Nilam)o Archiving and how to download data

o Data visualization tool

• Reaching clients (Yifei)o Webpage visits and data download statistics

o Promotion

Why SPEED?

• Public expenditure (PE) is a powerful instrument for achieving sustainable growth, poverty reduction, and transformationo Need to understand linkages between different types of

PE and development for better allocation of resources

o Calls for reliable data on use of public resources

• SPEED database developed to provide policymakers, researchers, etc. with the most comprehensive PE information o Officially launched in 2010

o Two updates: 2013 and 2015

Brief history and funding• Database work

o Shenggen Fan and Anuja Saurkaro Bing Yu and Sangeetha Malaiyandi; and Eduardo Magalhaes

• Supporto CKM (Luz Marina Alvare and Nilam Prasai)o Several colleagues (Xinshen Diao, Tewodaj Mogues, Frances

Cossar, Dario Debowicz, Inigo Verduzco Gallo, Athur Mabiso, Edina Metili Mwangi, Alejandro Nin-Pratt, Gissele GajateGarrido, Yifei Liu, Alvina Erman)

• Fundingo Initial stages funded by USAID via its support to the Regional

Strategic Analysis and Knowledge Support System (ReSAKSS) programs in Africa and Asia

o More recently, by the CGIAR Research Program on Policies, Institutions, and Markets (PIM)

SPEED data sources• Primary source: IMF Government Financial

Statistics (GFS) Yearbooks

• Supplemental sourceso IMF Statistical Appendices and Selected Issueso World Bank Public Expenditure Reviewso International and multilateral organizations (e.g. West

Africa Central Bank, Eurostat)

o National sources—e.g. budget documents and statistical abstracts Downloaded from websites (ministry of finance, statistics

bureau, accountant general’s office, central bank)

• Based on UN Classification of the Functions of Government (general government expenditure)

Data compilation (3 main issues)1. Missing data points within series—interpolation

o Single point: simple average of non-missing pointso Multiple consecutive points: linear trend between non-

missing points

2. Missing data points at the beginning or end of the series—extrapolationo Five-year average growth rate of non-missing points to

extend series backward or forward

3. Competing data points from multiple sources and consistency of filled data points—compare growth rates and shareso Missing data from any one source are sometimes replaced by

corresponding non-missing data from other sources—complicated with non-missing data from multiples sources

o Checking that filled data for subcomponents of total expenditure add up to the actual or non-missing total value

Overall consistency checks

1. Visual inspection using graphs to identify unrealistic deviations from trend or outliers

2. Sum of parts to check that the sum of sector expenditures is smaller than the total expenditure

3. Exclusion of negative expenditure values as a result of certain accounting procedures (e.g. sale of a nonfinancial asset particularly for countries in Europe)

4. Detailed source matching by documenting the source or method used to obtain each data point

What’s in the latest (2015) database?

• 147 countries from 1980 to 2012o Organized into 8 regions: East Asia and Pacific (EAP), Europe

and Central Asia (ECA), Latin America and the Caribbean (LAC), Middle East and North America (MENA), South Asia (SA), Africa south of the Sahara (SSA), Other Europe, and High Income (HI)

• 9 sectorso Agriculture, defense, education, fuel and energy, health,

mining, social protection, and transport & communication (separately and combined)

• Several indicatorso Expenditure in constant 2005 purchasing power parity (PPP)

dollars (PPP$) and constant 2005 US$o Percentage of sector expenditure in total expenditureo For agriculture, percentage of expenditure in agGDPo Percentage of total expenditure to total GDP

See details in SPEED Manual

Summary of data—global trends I

0

20

40

60

80

100

EAP ECA HIEurope

Other HI LAC MENA SA SSAAgriculture EducationHealth DefenseTransport & communication Social protectionOther

Annual average agricultural expenditure(% total expenditure, 1980-2012)

• Social protection attracted the largest share in the developed regions (HI Europe and Other Europe) and in ECA and LAC

• Education was top (10-17%) in other developing regions, except in MENA where defense was top spender (17%).

• Infrastructure and agriculture attracted the least shares (3-7%)

Summary of data—global trends II

1980-1989 1990-1999 2000-2012

Rank Share (%) Rank Share (%) Rank Share (%)

EAP 4 8.9 5 6.2 6 4.6

ECA - - 5 4.1 6 3.9

HI Europe 6 4.1 6 3.1 6 1.8

Other HI 5 3.3 6 2.6 6 2.0

LAC 6 4.1 6 3.7 6 2.2

MENA 6 4.1 5 3.2 6 2.5

SA 3 9.0 4 6.6 5 5.1

SSA 4 7.4 6 3.5 6 3.0

Rank is from 1 to 6, with 1 being the first or top rank.

Rank and share of agricultural expenditure share in total expenditure, 1980-2012

Rank and share of agriculture expenditure got worse over time

Summary of data—global trends III

-10

0

10

20Growth rate (%)

050

100150200

per capita (2005 PPP$)

0

5

10

% of total expenditure

0

10

20

30% of agricultural value added

Annual average agricultural expenditure, 1980-2012

Full story of global and regional trends in:

Third-party analysis (32 publications)—I

Type # Institutions

Journalarticles

11 American Political Science ReviewA*, Agricultural

EconomicsA, World DevelopmentA, Food and Nutrition

BulletinB, Journal of Technology Management and

Technopreneurship, Corporate Ownership and Control,

Journal of Economics and Sustainable Development,

Philosophical Transactions of the Royal Society, The BE

Journal of Macroeconomics, Journal of International Finance

Studies, Nepalese Journal of Agricultural Economics

Reports 11 World Bank, European Union, African Development Bank,

Climate Policy Initiative, Inter-American Development Bank,

FAO, UNDESA, OECD

DPs/BPs 7

Dissert. / Thesis

3 Vilnius, ISM - University of Management and Economics,

Lund University, Addis Ababa University

Third-party analysis—II

• Country/regional coverageo Country specific (2—Malawi and Ethiopia)

o Regional, cross-country comparisons: Latin America (4), Africa (8), South Asia (2), low and middle income countries (13)

• Thematic focuso Agriculture (17), social protection (3), cross-sectoral (5)

• Analytical issueso Relationship between government spending and growth

and productivity (3)

o Effect on or controlling for government spending (3)

o Composition of spending (1)

Third-party analysis—findings• Relationship between spending and growth and productivity

o Thapa et al (2015): increase agricultural expenditure or investment accelerate agricultural and total GDP growth and, consequently, achieving MDG1—Bangladesh, Nepal, Cambodia, and Lao PDR

o Shittu et al. (2014): strong/positive influence of public agricultural expenditure (PAE) on productivity in SSA; increase in annual PAE by US$3,000/worker (25x present level) needed to raise agTFP by 1%

o Musaba et al (2013): significant positive effects of agricultural and defense expenditure on economic growth. Expenditures on other sectors were negatively related to economic growth

• Effects on government spending o Doyle (2015): effect of remittances on government spending on social protection

is negative (used three different measurements of government social spending)o Sánchez, et al (2015): spending on social protection (unlike social sector)

increased steadily in low-income countries irrespective of the recent global financial crisis

o Ceriani et al (2011): social protection spending is negatively related to income distribution (gini)

• Composition of spending:o Lowder et al (2012): on-farm investments in agricultural capital are more than 4x

the size of government spending in agriculture in low and middle income countries

New directions of SPEED to consider

• Disaggregation by economic useo Compensation of employees, use of goods and services,

consumption of fixed capital, interest, subsidies, grants, social benefit, other

• Disaggregation of agriculture expenditure by sub-functiono Research (reconcile with ASTI), extension, irrigation,

marketing infrastructure, farm support, etc.

• Other sectors, identify key sub-functions for poverty and nutrition (other?), e.g.:o Expenditure in rural areas for all sectorso Primary education and health careo School feeding in education sector

Functions (COFOG)

701. Gen. Pub. Services

702. Defense

703. Pub. Order & Safety

704. Economic Affairs

705. Environ Protection

706. Housing &

Community Amenities

707. Health

708. Rec., Culture, & Rel.

709. Education

710. Social Protection

Economic classification

21. Compensation of

employees

22. Use of goods and

services

23. Consumption of

fixed capital

24. Interest

25. Subsidies

26. Grants

27. Social benefits

28. Other

Agriculturalsub-sector

Crops

Livestock

Forestry

Fishery

Agriculturalsub-functions

Extension

Research

Irrigation

Land management

Market infrastructure

Farm support

Policy, planning, M&E

Regulation, licensing

Statistics

…

Level

Central

State/Region

Local/District

…

Policy objective

Food security

Productivity/Growth

…

Target

Demography

Geography

…

Planning/Execution

Budget

Expenditure

Source of financing

Domestic (loan, tax)

External (loan, grant)

Different levels of disaggregation