Social Spending, Human Capital, and Growth in Developing Countries : Implications for Achieving the MDGs

Author/Editor:

Emanuele Baldacci ; Larry Q Cui ; Benedict J. Clements ; Sanjeev Gupta

Publication Date:

November 1, 2004

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Using panel data from 120 developing countries from 1975 to 2000, this paper explores the direct and indirect channels linking social spending, human capital, and growth in a system of equations. The paper finds that both education and health spending have a positive and significant direct impact on the accumulation of education and health capital, and thus can lead to higher economic growth. The paper also finds that other policy interventions, such as improving governance, reducing excessive budget deficits, and taming inflation, can also be helpful in moving countries toward the Millennium Development Goals (MDGs). As such, higher spending alone is not sufficient to achieve the MDGs.

Series:

Working Paper No. 04/217

Subject:

English

Publication Date:

November 1, 2004

ISBN/ISSN:

9781451875140/1018-5941

Stock No:

WPIEA2172004

Format:

Paper

Pages:

39

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