| Abstract [eng] |
The aim of this paper is to reveal how public expenditures volume and composition can contribute to the economic growth. The relation between public expenditures and economic growth is ambiguous. A certain level of public expenditures volume is desirable for the successful economic development of a country. However, at the particular point the increase in public expenditures volume becomes unfavourable and leads to the sluggish rates of economic growth. The Rahn curve explains the relation between public expenditures volume and economic growth rates. The impact of public expenditures on the economic growth depends on the development level of a country. According to the influence that can be made to the economic growth, public expenditures are classified as productive (positive impact) and non-productive (negative impact). Expenditures on defence, public order and safety, economic affairs, environmental protection, housing and community amenities, health, education are ought to be productive public expenditures. Expenditures on general public services, recreation, culture and religion, social protection are attributed to non-productive public expenditures. The increasing share of productive expenditures in total volume of public expenditures might lead to more rapid rates of the economic growth. However, it was settled that the impact of productive and non-productive expenditures depends on the management quality and the financing way of expenditures. The analysis of the reliance between public expenditures volume and GDP (Gross Domestic Product) changes in Lithuania enables us to state that the economic growth in a particular country is the most rapid when public expenditures volume is not too big, i.e., the hypothesis about an optimal public expenditures volume that should be supported with the most rapid economic growth is confirmed partly. According to the available data the most favourable (for the economic growth) share of public expenditures in total GDP of Lithuania is about 34%. Such volume of public expenditures is supported by 13% rate of economic growth. The analysis of the reliance between public expenditures composition and GDP changes in Lithuania and the estimation of average (non-)productivity levels of functional components of public expenditures enables us to state that theoretically non-productive functional components of public expenditures are non-productive in practice (general public services, recreation, culture and religion, social protection), i.e., they don’t have any impact or have negative impact on the economic growth. The conducted analysis enables us to state that only two of seven are productive in practice (economic affairs and health), i.e., they have positive impact on the economic growth. Other theoretically productive functional components of public expenditures don’t have any impact on the economic growth. |
