What is government spending

Of course, in some countries, government expenditure fails to meet the criteria for improved social benefits. For instance, the road network is one of the key pillars of government expenditure.

Although the benefit from the existence of the road network is not always immediately visible, four more minutes of additional movement per day per employee may not sound like a significant amount of time, but it adds two working days per year.

Here we focus on the social spending component of government expenses, and show that high-income countries also have higher levels of social spending, particularly in the form of transfers. The visualization, from Bastagli et al 2 , shows stacked social expenditure figures for different country groups. The different color segments in the bars reflect different components of social spending.

The sizes reflect expenditure as share of GDP. This contrasts with the figures from sub-Saharan Africa, where social spending is much lower across the board, and where transfers play a less important role. The chart here shows social protection expenditures as a share of total general government spending, across different OECD countries.

Although there are some small cross-country variations in the way social expenditure is distributed, the three priorities are predominantly the same across the OECD. Old age expenditure in the form of pensions and elderly care typically receives the largest allocation of social spending, followed by health, with either family or incapacity-related benefits typically coming in third.

On average, OECD countries spend per cent of GDP on old age care, 6 per cent on health, and 2 per cent on both family and incapacity-related benefit. And the relative importance of these branches has remained largely constant since The visualization shows the share of central government expenditure that goes to the compensation of government employees. Compensation of employees includes all salaries and benefits both in cash and in kind.

As we can see, the salaries of public servants and other government employees are an important component of public spending in most countries. Yet differences between countries are very large. Governments around the world often rely on the private sector to produce and manage goods and services. The two visualizations show the importance of public procurement in OECD countries and partner countries providing comparable data.

The first chart shows the value of total general government procurement as percentage of GDP, while the second chart shows the relative weight of procurement within total expenditure i. As we can see, public sector purchases from the private sector are significant in many high-income countries.

Public procurement comprises many different forms of purchases. Public procurement includes, for example, tendering and contracting in order to build large infrastructural projects. However, public procurement goes beyond infrastructure. It also includes, for example, purchases of routine office supplies. Generally speaking, the part of public procurement that does not fall within the category of gross fixed capital formation e.

This form of procurement often relies on short-term contracts. According to the definitions used by the OECD, outsourcing includes both intermediate goods used by governments such as procurement of information technology services , or the outsourcing of final goods and services financed by governments such as social transfers in kind via market producers paid for by governments.

The visualization shows total expenditures on general government outsourcing accounting for both intermediate and final goods , as a share of GDP. The data is from , and is available only for a selection of OECD member countries plus a few other partner countries reporting data to the OECD under the same methodology.

As we can see, governments in many high-income countries spend substantial resources via outsourcing. Public procurement strategies available to governments are varied. Governments may choose to take responsibility for financing, designing, building and operating infrastructure projects — and they simply outsource specific elements.

Or they may choose to pursue a public-private partnership, where private actors directly take responsibility for all these aspects, from financing to operation. These initiatives typically take the form of long-term contracts. The blue series shows the total value of projects in US dollars scale in the left vertical axis , while the orange series shows the total number of projects scale in the right vertical axis.

As we can see, the last two decades have seen a marked increase in public-private partnerships in low and middle-income countries.

The estimates by sectors and world regions suggests that electricity and roads, specifically in South Asia and Latin America, have been the key drivers of these aggregate trends. We have already pointed out that government expenditure as a share of national income is higher in richer countries. The visualization provides further evidence of the extent of this correlation. The vertical axis measures GDP per capita after accounting for differences in purchasing power across countries , while the horizontal axis measures governments spending as share of GDP.

We can see that there is a strong positive correlation: high-income countries tend to have larger government expenditures as a share of their GDP. When interpreting these figures, note that a the data are adjusted for the reference period 1 April — 31 March and b in order to compare across all levels of government, data are converted from an accrual basis of recording to a cash basis of recording.

From Stats SA, Mid-year population estimates, Country projection by population group, sex and age Excel file download here. Similar articles are available on the Stats SA website and can be accessed here. For a monthly overview of economic indicators and infographics, catch the latest edition of the Stats Biz newsletter here.

What does government spend money on? Comparing the bubbles across the board highlights some interesting facts: Government spends more money on police services than it does on tertiary education or housing. On the social front, slightly more money was spent on old-age grants than on grants related to family and children child support, foster care and care dependency grants.

This function includes costs mainly related to the administration of parliament, the provincial legislatures and mayoral offices. This was more than what was spent on either housing, hospitals, tertiary education or police. Compensation of employees You may be wondering where employment costs fit in. Posted on November 26, Facebook Twitter Linkedin. Publication Schedule Updated! My Municipality Municipal Profiles. Careers Vacancies Internship Bursaries.

Stats SA is in the process of updating its database of all users. Kindly participate in this short survey and provide your details. The Department of Social Development dominated spending in this category. Departments involved in safety and security dominated spending on employee costs. Note that the data reflected in this report cover national departments only. Stats SA also publishes financial reports for other levels of government i. These reports are followed by a consolidated document in November that provides a complete overview of net government finances.

For more information on national government finances, download the latest Financial statistics of national government release here. Similar articles are available on the Stats SA website and can be accessed here. For a monthly overview of economic indicators and infographics, catch the latest edition of the Stats Biz newsletter here.

Posted on June 30, Facebook Twitter Linkedin. Publication Schedule Updated! My Municipality Municipal Profiles. Careers Vacancies Internship Bursaries. Stats SA is in the process of updating its database of all users. Kindly participate in this short survey and provide your details.