Dynamic Linkages between Social Expenditures and Economic Growth: the Most Important Conclusions for Central European Countries

Tuncer Govdeli; Esra Karakuş Umar

doi:10.18778/1508-2008.24.28

Authors

Tuncer Govdeli Assoc. Prof., Oltu Faculty of Humanities and Social Sciences, University of Ataturk Oltu Yerleşkesi, Yusuf Ziyabey Mahallesi, Sanayi Caddesi, Erzurum, Turkey https://orcid.org/0000-0002-6600-8684
Esra Karakuş Umar Asst. Prof. Dr. Oltu Faculty of Humanities and Social Sciences, University of Ataturk Oltu Yerleşkesi, Yusuf Ziyabey Mahallesi, Sanayi Caddesi, Erzurum, Turkey https://orcid.org/0000-0003-1764-9394

DOI:

https://doi.org/10.18778/1508-2008.24.28

Keywords:

social expenditures, economic growth, political economy, Central European countries, panel data

Abstract

The role of the state within the neoliberal system is discussed in the approaches developed for social expenditures. Accordingly, the question of whether the state should stand back or provide the support needed by individuals has shaped the literaturę on social expenditures. It is thought that the increase in social expenditures affects public expenditures, and public expenditures may indirectly cause budget deficits. In addition, it is said that there is a decrease in social spending during periods of economic growth. All these dilemmas show that the idea that the country needs both producers and consumers while realizing economic growth has been pushed into the background. Here, the analyses of the relationship between social spending and economic growth are the arguments for the accuracy of this assumption.

The aim of this study is to empirically analyze the long-term relationship between the economic growth and social expenditures of eight Central European countries and the causality relationship for 1999 and 2019. In the empirical findings, the cointegration relationship was determined between economic growth and social spending. Based on the findings of the causality analysis, it has been concluded that there is a bidirectional causality relationship between economic growth and social expenditures. Policy proposals are given in the conclusion section of the article.

Downloads

Download data is not yet available.

References

2018 Sosyal Koruma İstatistikleri (2019), http://www.alomaliye.com/2019/12/12/2018-sosyal-koruma-istatistikleri/ (accessed: 12.12.2020).

Alataş, S., Sarı, E. (2021), An Empirical Investigation on Regional Disparities in Public Expenditures: Province Level Evidence from Turkey, “Social Indicators Research”, https://doi.org/10.1007/s11205-021-02691-x DOI: https://doi.org/10.1007/s11205-021-02691-x

Altunc, O.F., Aydın, C. (2013), The relationship between optimal size of government and economic growth: Empirical evidence from Turkey, Romania and Bulgaria, “Procedia-Social and Behavioral Sciences”, 92, pp. 66–75, https://doi.org/10.1016/j.sbspro.2013.08.639 DOI: https://doi.org/10.1016/j.sbspro.2013.08.639

Arısoy, İ., Ünlükaplan, İ., Ergen, Z. (2010), Sosyal harcamalar ve iktisadi büyüme ilişkisi: Türkiye ekonomisinde 1960–2005 dönemine yönelik bir dinamik analiz, “Maliye Dergisi”, 158, pp. 398–421, https://ms.hmb.gov.tr/uploads/2019/09/20.Ibrahim.ARISOY_Ilter.UNLUKAPLAN_Zuhal.ERGEN_.pdf (accessed: 3.02.2021).

Baum, N.D., Lin, S. (1993), The differential effects on economic growth of government expenditures on education, welfare, and defense, “Journal of Economic Development”, 18 (1), pp. 175–185, http://www.jed.or.kr/full-text/18-1/9.pdf (accessed: 3.02.2021).

Beveridge, W. (1942), The Beveridge report in brief: [a summary of] Social insurance and allied services: report by Sir William Beveridge. “HM Stationery Office”, https://www.sochealth.co.uk/national-health-service/public-health-and-wellbeing/beveridge-report/ (accessed: 3.02.2021).

Breusch, T.S., Pagan, A.R. (1980), The Lagrange multiplier test and its applications to model specification in econometrics, “The Review of Economic Studies”, 47 (1), pp. 239–253, https://www.jstor.org/stable/2297111?seq=1#metadata_info_tab_contents (accessed: 3.02.2021). DOI: https://doi.org/10.2307/2297111

Chantzaras, A.E., Yfantopoulos, J.N. (2018), Financial protection of households against health shocks in Greece during the economic crisis, “Social Science & Medicine”, 211, pp. 338–351, https://doi.org/10.1016/j.socscimed.2018.06.024 DOI: https://doi.org/10.1016/j.socscimed.2018.06.024

Cinel, E. (2021), Türkiye’de Eğitim Harcamaları ve Sürdürülebilir Büyüme İlişkisi, “Avrasya Sosyal ve Ekonomi Araştırmaları Dergisi”, 8 (2), pp. 210–227.

Devarajan, S., Swaroop, V., Zou, H.F. (1996), The composition of public expenditure and economic growth, “Journal of Monetary Economics”, 37 (2), pp. 313–344, https://doi.org/10.1016/S0304-3932(96)90039-2 DOI: https://doi.org/10.1016/S0304-3932(96)90039-2

Emirmahmutoglu, F., Kose, N. (2011), Testing for Granger causality in heterogeneous mixed panels, “Economic Modelling”, 28 (3), pp. 870–876, https://doi.org/10.1016/j.econmod.2010.10.018 DOI: https://doi.org/10.1016/j.econmod.2010.10.018

Ersin, İ., Baş, H. (2019), Güney Avrupa refah ülkelerinde sosyal harcamalar ve ekonomik büyüme arasındaki ilişkinin incelenmesi, “SGD Sosyal Güvenlik Dergisi”, 9 (1), pp. 193–213, https://doi.org/10.32331/sgd.582752 DOI: https://doi.org/10.32331/sgd.582752

Esping-Andersen, G. (1990), The three worlds of welfare capitalism, Princeton University Press, Princeton. DOI: https://doi.org/10.1177/095892879100100108

Ferrera, M. (1996), The “Southern model” of welfare in social Europe, “Journal of European Social Policy”, 6 (1), pp. 17–37, https://doi.org/10.1177/095892879600600102 DOI: https://doi.org/10.1177/095892879600600102

Glomm, G., Ravikumar, B. (1997), Productive government expenditures and long-run growth, “Journal of Economic Dynamics and Control”, 21 (1), pp. 183–204, https://doi.org/10.1016/0165-1889(95)00929-9 DOI: https://doi.org/10.1016/0165-1889(95)00929-9

Gümüş, İ. (2018), Tarihsel perspektifte refah devleti: Doğuş, yükseliş ve yeniden yapilanma süreci, „Journal of Political Administrative and Local Studies”, 1 (1), pp. 33–66, https://dergipark.org.tr/en/download/article-file/473729 (accessed: 3.02.2021).

Hajamini, M., Falahi, M.A. (2018), Economic growth and government size in developed European countries: A panel threshold approach, “Economic Analysis and Policy”, 58, pp. 1–13, https://doi.org/10.1016/j.eap.2017.12.002 DOI: https://doi.org/10.1016/j.eap.2017.12.002

Herce, J.A., Sosvilla-Rivero IV , S., De Lucio, J.J. (2000), Social protection benefits and growth: evidence from the European Union, “Applied Economics Letters”, 7 (4), pp. 255–258, https://doi.org/10.1080/135048500351627 DOI: https://doi.org/10.1080/135048500351627

Im, K.S., Pesaran, M.H., Shin, Y. (2003), Testing for unit roots in heterogeneous panels, “Journal of Econometrics”, 115 (1), pp. 53–74, https://doi.org/10.1016/S0304-4076(03)00092-7 DOI: https://doi.org/10.1016/S0304-4076(03)00092-7

Kao, C. (1999), Spurious regression and residual-based tests for cointegration in panel data, “Journal of Econometrics”, 90 (1), pp. 1–44, https://doi.org/10.1016/S0304-4076(98)00023-2 DOI: https://doi.org/10.1016/S0304-4076(98)00023-2

Kar, M., Taban, S. (2003), Kamu harcama çeşitlerinin ekonomik büyümeye etkisi, “Ankara Üniversitesi SBF Dergisi”, 58 (3), pp. 159–175, https://doi.org/10.1501/SBFder_0000001652 DOI: https://doi.org/10.1501/SBFder_0000001652

Kaymaz, V. (2018), OECD Ülkelerinde Sosyal Harcamaların Belirleyicileri, “Gazi İktisat ve İşletme Dergisi”, 4 (2), pp. 118–130, https://doi.org/10.30855/gjeb.2018.4.2.005 DOI: https://doi.org/10.30855/gjeb.2018.4.2.005

Kelly, T. (1997), Public expenditures and growth, “The Journal of Development Studies”, 34 (1), pp. 60–84, https://doi.org/10.1080/00220389708422503 DOI: https://doi.org/10.1080/00220389708422503

Konopczynski, M. (2021), How Taxes, Education and Public Capital Influence Economic Growth in Poland, “Contemporary Economics”, 12 (3), pp. 337–360.

Kutluay Şahin, D. (2020), Eğitimin Ekonomik Büyüme Üzerindeki Etkileri: Ab Ülkeleri İçin Panel Veri Analizi, „Çankırı Karatekin Üniversitesi İibf Dergisi”, 10 (2), pp. 657–672, https://doi.org/10.18074/ckuiibfd.717393 DOI: https://doi.org/10.18074/ckuiibfd.717393

Landau, D. (1986), Government and economic growth in the less developed countries: an empirical study for 1960–1980, “Economic Development and Cultural Change”, 35 (1), pp. 35–75, https://doi.org/10.1086/451572 DOI: https://doi.org/10.1086/451572

Levin, A., Lin, C.F., Chu, C.S.J. (2002), Unit root tests in panel data: asymptotic and finite‑sample properties, “Journal of Econometrics”, 108 (1), pp. 1–24, https://doi.org/10.1016/S0304-4076(01)00098-7 DOI: https://doi.org/10.1016/S0304-4076(01)00098-7

McCoskey, S., Kao, C. (1998), A residual-based test of the null of cointegration in panel data, “Econometric Reviews”, 17 (1), pp. 57–84, https://doi.org/10.1080/07474939808800403 DOI: https://doi.org/10.1080/07474939808800403

Moon, H.R., Perron, B. (2004), Testing for a unit root in panels with dynamic factors, “Journal of Econometrics”, 122 (1), pp. 81–126, https://doi.org/10.1016/j.jeconom.2003.10.020 DOI: https://doi.org/10.1016/j.jeconom.2003.10.020

Otani, I., Villanueva, D. (1989), Theoretical aspects of growth in developing countries: External debt dynamics and the role of human capital, “Staff Papers”, 36 (2), pp. 307–342, https://doi.org/10.5089/9781451969443.001 DOI: https://doi.org/10.2307/3867145

Özdemir, S. (2007), Küreselleşme sürecinde refah devleti, İstanbul Ticaret Odası, İstanbul.

Pedroni, P. (1999), Critical values for cointegration tests in heterogeneous panels with multiple regressors, “Oxford Bulletin of Economics and Statistics”, 61 (S1), pp. 653–670, https://onlinelibrary.wiley.com/doi/abs/10.1111/1468-0084.0610s1653 (accessed: 3.02.2021). DOI: https://doi.org/10.1111/1468-0084.61.s1.14

Pesaran, M.H. (2007), A simple panel unit root test in the presence of cross‐section dependence, “Journal of Applied Econometrics”, 22 (2), pp. 265–312, https://doi.org/10.1002/jae.951 DOI: https://doi.org/10.1002/jae.951

Pesaran, H.M. (2020), General diagnostic tests for cross‑sectional dependence in panels, “Empirical Economics”, 60, pp. 1–38, https://doi.org/10.1007/s00181-020-01875-7 DOI: https://doi.org/10.1007/s00181-020-01875-7

Pesaran, M.H., Yamagata, T. (2008), Testing slope homogeneity in large panels, “Journal of econometrics”, 142 (1), pp. 50–93, https://doi.org/10.1016/j.jeconom.2007.05.010 DOI: https://doi.org/10.1016/j.jeconom.2007.05.010

Rakıcı, C., Kurşun, A. (2016), Sosyal refah devletinin tarihi süreci ve günümüz bazı refah devletlerinin değerlendirilmesi, “Uluslararası Ekonomi ve Yenilik Dergisi”, 2 (2), pp. 135–156, https://doi.org/10.20979/ueyd.47794 DOI: https://doi.org/10.20979/ueyd.47794

Torun, M., Eroğlu, E., Bayrak, R. (2021), Savunma Harcamalarının Ekonomik Büyümeye Etkisi: NATO Ülkeleri Üzerinde Panel Veri Analizi, “Yönetim Bilimleri Dergisi”, 19 (40), pp. 489–507, https://doi.org/10.35408/comuybd.877219 DOI: https://doi.org/10.35408/comuybd.877219

Trofimov, I.D. (2020), Health Care Spending and Economic Growth: Armey-Rahn Curve in a Panel of European Economies, “MPRA Paper No. 106705”, pp. 1–24.

Tutar, K.F., Ekici, M. (2020), Ekonomik Büyümenin Lokomotifi Olan Sağlık Sektörü ve Türkiye Uygulaması, “Journal of Social, Humanities and Administrative Sciences”, 6 (30), pp. 1335–1342. DOI: https://doi.org/10.31589/JOSHAS.297

Türk, İ. (1979), Maliye politikası Amaçlar, Araçlar ve Çağdaş Bütçe Teorileri, Sevinç Matbaası, Ankara.

Ünal, S., Afşar, B. (2021), Türkiye’de Sosyal Güvenlik Harcamaları ile Ekonomik Büyüme Arasındaki İlişki: Eşbütünleşme Analizi ve Granger Nedensellik Testi, “Selçuk Üniversitesi Sosyal Bilimler Enstitüsü Dergisi”, 45, pp. 430–439, https://doi.org/10.52642/susbed.929894 DOI: https://doi.org/10.52642/susbed.929894

Wang, F., Wang, J.D. (2021), Investing preventive care and economic development in ageing societies: empirical evidences from OECD countries, “Health Economics Review”, 11 (1), https://doi.org/10.1186/s13561-021-00321-3 DOI: https://doi.org/10.1186/s13561-021-00321-3

Wang, K.M., Lee, Y.M., Lin, C.L., Tsai, Y.C. (2018), The effects of health shocks on life insurance consumption, economic growth, and health expenditure: A dynamic time and space analysis, “Sustainable Cities and Society”, 37, pp. 34–56, https://doi.org/10.1016/j.scs.2017.10.032 DOI: https://doi.org/10.1016/j.scs.2017.10.032

Webber, D.J. (2002), Policies to stimulate growth: should we invest in health or education?, “Applied Economics”, 34 (13), pp. 1633–1643, https://doi.org/10.1080/00036840110115109 DOI: https://doi.org/10.1080/00036840110115109

Westerlund, J. (2008), Panel cointegration tests of the Fisher effect, “Journal of Applied Econometrics”, 23 (2), pp. 193–233, https://doi.org/10.1002/jae.967 DOI: https://doi.org/10.1002/jae.967

Wing, Y.C. (2021), A Study on Assessing Government Size, the Composition of Public Spending on Education and Economic Growth in the USA, “Journal of Accounting, Business and Finance Research”, 11 (1), https://doi.org/10.20448/2002.111.1.8 DOI: https://doi.org/10.20448/2002.111.1.8

Yıldırım, B., Şahin, F. (2019), Esping-Andersen’in refah devleti sınıflandırması ve makro sosyal hizmet uygulamaları temelinde Türkiye’nin konumu, “OPUS Uluslararası Toplum Araştırmaları Dergisi”, 11 (18), pp. 2525–2554, https://doi.org/10.26466/opus.542395 DOI: https://doi.org/10.26466/opus.542395