Tuesday, October 25, 2011

National government spending as a percentage of GDP by country

A few years ago, I became frustrated when unable to find a table of national governmental expenditures as a percentage of GDP by country. So, using data from the invaluable CIA World Factbook, I created one.

It's gathered some dust, and an update is in line, especially since something or other having to do with the global economy occurred between then and 2010, from which the most recent data come. An inquiry from an author (who I won't name but who is certainly welcome to be made known in the comments if he so desires) searching for more recent numbers served as the impetus to actually get it done. Getting out in front of the inevitable objections, a disclaimer: These data do not include all government spending and state, local, and provincial government outlays of course differ from country to country. For consistency, all figures are in exchange rate terms:

Country
GE as GDP
1. Iraq
88.1%
2. Cuba
86.5%
3. Ireland
67.0%
4. Lesotho
65.5%
5. Denmark
58.4%
6. France
55.7%
7. Finland
53.6%
8. Sweden
53.4%
9. Belgium
53.0%
10. Austria
52.9%
11. Libya
52.2%
12. Netherlands
51.3%
13. Italy
51.2%
14. United Kingdom
50.9%
15. Portugal
50.6%
16. Iceland
50.1%
17. Bosnia and Herzegovina
49.8%
18. Hungary
49.3%
19. Greece
49.3%
20. Serbia
49.3%
21. Equatorial Guinea
47.3%
22. Cyprus
46.6%
23. Germany
46.5%
24. Norway
46.3%
25. Slovenia
46.3%
26. Belarus
45.1%
27. Spain
44.9%
28. New Zealand
44.4%
29. Cape Verde
43.9%
30. Canada
43.8%
31. Latvia
42.8%
32. Bolivia
42.5%
33. Botswana
42.5%
34. Croatia
42.4%
35. Malta
41.8%
36. Eritrea
41.8%
37. Brunei
41.7%
38. Lithuania
41.4%
39. Luxembourg
41.3%
40. Slovakia
41.0%
41. Moldova
40.8%
42. Japan
40.6%
43. Romania
39.3%
44. Swaziland
38.9%
45. Estonia
38.8%
46. Bulgaria
38.0%
47. Algeria
37.8%
48. Saudi Arabia
37.7%
49. Chad
37.3%
50. Oman
37.2%
51. Macedonia
36.4%
52. Czech Republic
35.8%
53. Australia
35.7%
54. South Africa
35.6%
55. Burundi
35.3%
56. Malawi
35.3%
57. Trinidad and Tobago
35.0%
58. Georgia
34.8%
59. Switzerland
34.7%
60. Angola
34.6%
61. Ukraine
34.3%
62. Vietnam
33.7%
63. Mongolia
33.1%
64. Nicaragua
32.9%
65. Kuwait
32.9%
66. Namibia
32.6%
67. Jamaica
32.6%
68. Israel
32.4%
69. Kyrgyzstan
32.3%
70. Uzbekistan
32.2%
71. Seychelles
31.9%
72. Ecuador
30.9%
73. Papua New Guinea
30.8%
74. Aruba
30.7%
75. Uruguay
30.5%
76. Mozambique
30.2%
77. Zimbabwe
30.1%
78. Egypt
29.8%
79. Guyana
29.7%
80. Albania
29.6%
81. Jordan
29.4%
82. Nepal
29.0%
83. Lebanon
28.8%
84. Belize
28.7%
85. Colombia
28.3%
86. Kenya
28.1%
87. Gabon
27.8%
88. Panama
27.6%
89. Burkina Faso
27.5%
90. British Virgin Islands
27.4%
91. Venezuela
27.4%
92. Brazil
27.4%
93. Senegal
27.3%
94. Yemen
27.2%
95. Bahrain
27.0%
96. Azerbaijan
26.9%
97. Armenia
26.5%
98. Malaysia
26.5%
99. Turkey
26.3%
100. Morocco
26.3%
101. Tunisia
26.3%
102. Rwanda
26.2%
103. Tajikistan
26.1%
104. Ghana
25.9%
105. Tanzania
25.5%
106. Mauritius
25.5%
107. Mexico
25.4%
108. Syria
25.2%
109. Iran
25.2%
110. Sierra Leone
24.5%
111. Qatar
24.4%
112. Kazakhstan
23.7%
113. United States
23.6%
114. Argentina
23.5%
115. Russia
23.3%
116. Zambia
23.2%
117. China
23.0%
118. Sri Lanka
22.8%
119. Chile
22.8%
120. Guinea
22.6%
121. El Salvador
22.5%
122. Honduras
22.2%
123. Togo
22.1%
124. South Korea
22.1%
125. Cote d'Ivoire
22.0%
126. Haiti
21.6%
127. Benin
21.3%
128. Afghanistan
21.1%
129. Laos
21.1%
130. United Arab Emirates
21.0%
131. Poland
20.9%
132. Republic of the Congo
20.6%
133. Pakistan
20.4%
134. Costa Rica
19.8%
135. Cameroon
19.7%
136. Sudan
19.5%
137. Thailand
19.5%
138. Peru
19.5%
139. Taiwan
19.0%
140. Gambia
18.8%
141. Indonesia
18.8%
142. Cambodia
18.6%
143. Philippines
17.9%
144. India
17.5%
145. Paraguay
17.4%
146. Hong Kong
17.3%
147. Bahamas
17.2%
148. Uganda
17.2%
149. Ethiopia
16.9%
150. Central African Republic
16.5%
151. Dominican Republic
16.5%
152. Madagascar
16.2%
153. Nigeria
15.5%
154. Bangladesh
15.1%
155. Singapore
14.5%
156. Guatemala
14.5%
157. Turkmenistan
9.3%

To view a visual representation, click here.

As the Iraq war finally draws to a close, at least we were able to transfer one tenet of contemporary Western democracies in a recognizable form to Baghdad. What's that? Isonomy? Respect for dissenting viewpoints? Individual liberty? No, no, no, Don Quixote. It's big government, of course!

Outside of a few paradises like Cuba, Western Europe dominates the top spots. The US figure, in comparison, is a bit of an apples-to-oranges one, as the table is, as mentioned previously, constructed on central (that is, federal) governmental expenditures and does not directly include the spending by local, state, or provincial governments. Around 40% of government spending in the US is doled out through state and local governments, a proportion higher than just about anywhere else in the world. Consequently, the US ratio appears deceptively small.

Still, if non-federal spending is included, the US is neck and neck with Japan, well below the bulk of the rest of the Western world. As ubiquitous as government seems to be stateside, its presence is relatively small compared to Europe.

Parenthetically, Switzerland (for which the CIA factbook includes cantonal and municipal spending in addition to federal spending) , a favorite of the American alternative right, stands apart from the rest of the Old Continent. In so many ways, this beautiful Alpine country instills in pessimistic conservatives a hope for what might yet be.

As a Radio Derb votary, I've long wondered why Turkmenistan is singled out as recipient of so much love on the weekly broadcast. To an ignorant yankee like myself, it's scarcely distinguishable from the rest of the crapistans. I need wonder no longer. The Derb may claim that the president's name is the source of affection, but the table above reveals the truth of the matter!

The relative paucity of government spending in affluent East Asian nations like Japan, South Korea, Singapore, and even officially communist China is to some extent a consequence of the absence of generous government-provided welfare systems in these places, with pensions, medical care, and the like mostly covered by employers rather than by the state, as tends to be the case in Western Europe.

There is a statistically significant but modestly positive correlation (.22, p = .01) between a country's per capita GDP and that country's amount of government spending as a share of its GDP. Correlation is not necessarily causation, of course, but with otherwise backwards countries that have enormous resource wealth (ie, Botswana and Saudi Arabia) tending towards the leviathan end of the governmental expenditures scale, to the extent that the causation arrow exists, it probably points from high GDP towards prodigious government spending rather than the other way around.

On its face, there doesn't appear to be much here that validates the libertarian view that minimizing the size of the federal government, and avoiding the consequent economic distortions its continued growth will otherwise cause, should be the exclusive goal of a society wanting economic prosperity and an overall improved quality of life. Ceteris paribus it's relevant, perhaps (I certainly think it is), but there are clearly a host of other demographic and cultural variables that are of greater importance. Who would rather operate a business--or live--in Nigeria instead of in Denmark?

17 comments:

Anonymous said...

A table publishing national expenditures but omitting those by all other levels of government is worse than useless. It's misleading.

Do Western European governments spend greater parts of their GDP than American governments do? Yes. But the difference isn't even close to what that chart implies. France pays for all education and all medical spending at the Federal level. We do most of the former and much of the latter at the state or local level.

Your insane table shows some western democracies spending twice as much as others when I believe actual numbers show that the actual difference in total government spending as a portion between the most libertarian nation and the biggest pinko welfare state is less than ten percentage points.

Talk of some countries being very laissez-faire and others being very socialist is mostly just talk. Liberal democracies run in very similar ways, with some tweaks on the edges to reflect local taste.

Granted, federalism makes it impossible to toss out one number for the U.S. because people in Texas have a lower tax burden than people in NYC, but one chart space could ranges in the U.S. and other federal countries. Another way to tackle it would be to list total spending in different areas: defense, k-12 education, etc. But this table is makes those who read it more ignorant rather than more informed.

Jon Claerbout said...

If you live in California, maybe you want to add 10% state tax to that USA number.

Audacious Epigone said...

Anon,

No, obviously the difference is far greater than 10%, as even when all levels of US governmental spending are included, the US comes in more than 20% under much of the rest of Western Europe, and those Western Europe numbers do NOT include anything but the federal level. So the US, at all levels, is about 75% of, say, French spending at the national level. Also, the Swiss number includes all spending as well, and it is, in % terms, far lower than other places in Western Europe.

Noah said...

Turkmenistan may be a squalid tyranny, but it is a remarkably cost-efficient squalid tyranny. Take notes, Fidel!

The saying "you get what you pay for" seems to hold up for Guatemala, Madagascar, and Bangladesh.

Ed Tom Kowalsky said...

I'm fascinated by the apparently disparate paths taken by the former Soviet republics and Warsaw Pact countries. Hungary and Belarus check in at No.18 and No.26 respectively in terms of spending, while Poland and Turkmenistan rate No.131 and No.157. Have the former really clung tenaciously to command economics while the latter wholeheartedly took the free market plunge? It seems incredible.

Skeptical Economist said...

Audacious,

I think you once posted the correlation between inequality (gini?) at the state level and the Hispanic population share? What it the immigrant population share? Both?

Is this correct?

What were the numbers?

Thank you

Anonymous said...

Rich countries allocate a larger share of their GDP to government. Poor countries allocate a smaller share of their GDP to government.

So yes, from the standpoint of a small government libertarian, Turkmenistan is the ideal state.

But I don't think we need to go there to see the problems inherent in libertarianism. One of the fastest growing economies in the world is militantly mercantillist China.

Audacious Epigone said...

Skeptical Economist,

I think this is what you're referring to.

Skeptical Economist said...

Audacious,

Thank you. Actually, one of your other posts "Gini's a better measure" (http://anepigone.blogspot.com/2006/04/ginis-better-measure.html) is closer to what I was looking for. You give an r squared of 0.56 for the black / Hispanic grouping.

Do you have the numbers for blacks and Hispanics separately controlling for each other? This should provide a better measure of the impact of immigration on inequality in the U.S.

Thank you

Skeptical Economist

Audacious Epigone said...

Skeptical Economist,

I went through a computer crash in 2007 and consequently don't have the "early" TAE stuff on file any longer, so those data aren't accessible to me any longer, sorry.

Anonymous said...

Among the developed countries it's interesting that the countries at the top of the table (such as Sweden and Ireland)tend to have levels of free trade while those towards the bottom of the table have high levels of protectionism (Japan, Korea).

Skeptical Economist said...

Audacious,

I have constructed an Excel workbook with some of the Gini / demographic data. Do you have an Email address I could send it to?

Thank you

Skeptical

Audacious Epigone said...

Skeptical Economist,

crush41@iwon.com

Anonymous said...

The image of "Switzerland" is actually of Waterton Lakes National Park in Alberta Canada. The Prince of Wales hotel gives it away. Here is the exact same photo properly tagged.
http://albertatravel.org/Waterton_Park.htm

Bob Light said...

I would hazard a guess that the proper metric is how much of GDP is spent on activities which do not provide any increase in GDP in return. Sort of a ROI analysis.

Spending public funds to support your sick is a valid form of charity and should be a part of any civilized society - the ROI on that investment nears 0...but it is necessary nonetheless.

Spending public funds to feed those who do not want to work - this is a waste of money - the ROI is negative.

Those who do not want to work include young retirees who just want to be on vacation, healthy poor people etc... pay these people but require the ROI to be at least 0, if not positive.

Just looking at government expeditures is going to be misleading at best - better to look at expeditures on an ROI basis - though I have no idea how you would do that.

Audacious Epigone said...

Bob,

Yes, if measuring something like government profligacy (however exactly that would be defined) is what you're specifically trying to do. This post isn't that ambitious, though--it's more of an FYI.

Anonymous said...

Out of curiosity, for the USA, why did you omit spending on social benefits from the total figure? From the CIA Factbook for the USA:

GDP: $15.06 trillion
revenues: $2.264 trillion
expenditures: $3.604 trillion
note: for the US, revenues exclude social contributions of approximately $1.0 trillion; expenditures exclude social benefits of approximately $2.3 trillion (2011 est.)

If you use only the expenditures, then you indeed arrive at your figure of 24%. With social benefits factored in (and since the taxpayer is paying for those, I don't see why they wouldn't be included), it comes to 39%.

Am I missing something?