The relationship between the functional classification of public expenditures and economic growth: a research on OECD countries

In this study, the effect of functional public expenditures of 34 OECD member countries on economic growth between 2009 and 2020 was investigated. However, in 2009–2020, there were a total of 36 countries that were members of the OECD. Two of these countries (Colombia and Mexico) were not included in the study because their data for the specified years could not be accessed. Research data were taken from the database of the World Bank and IMF. In the study, the dependent variable is gross domestic product (GDP), which expresses economic growth, and general public services, which express functional public expenditures, defense services, public order and security services, economic affairs, environmental protection services, housing and social welfare services, health expenditures, culture and religious expenditures, education expenditures, and social protection services expenditure items in total public expenditures were used as independent variables. Two-step system GMM dynamic panel data analysis method was used in the analysis of the research. As a result of the analysis; general public services (0.020; 0.000), defense services (0.017; 0.000), public order and security services (0.029; 0.000), economic affairs (0.017; 0.000), environmental protection services (0.029; 0.000), housing and community welfare services (0.025; 0.000) health expenditures (0.015; 0.000), culture and religion expenditures (0.024; 0.000), education expenditures (0.018, 0.000), social protection services (0.019; 0.000) positive relationship between economic growth. According to this; A 1% increase in general public services increases the economic growth rate by 0.02, a 1% increase in defense services increases the economic growth rate by 0.017, a 1% increase in public order and security services increases the economic growth rate by 0.029, a 1% increase in economic affairs increases the economic growth rate by 0.017, and 1% in environmental protection services increases the economic growth rate by 0.029. increase in the economic growth rate by 0.029, 1% increase in housing and social welfare services by 0.025 on the economic growth rate, 1% increase in health expenditures by 0.015 on the economic growth rate, 1% increase in culture and religious expenditures by 0.024 on the economic growth rate, 1% increase in education expenditures by 0.024 on economic growth rate, and a 1% increase in social protection services expenditures contributes 0.019 to the economic growth rate.