Government spending and sustainable economic growth: Based on first- and second-level COFOG data

Abstract

The authors look at the effect of the composition of government spending on per capita GDP level using Classification of the Functions of Government (COFOG) data. Government spending on education was found to significantly impact per capita GDP in the short term. R&D spending on education and recreation, culture and religion was found to have a significant long-run GDP effect. This paper suggests that developed countries can successfully promote economic growth by redirecting their total spending portfolio toward education and by increasing their R&D spending on education and recreation, culture and religion.