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Public expenditure, economic growth and poverty alleviation

Author

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  • Ritwik Sasmal
  • Joydeb Sasmal

Abstract

Purpose - – The purpose of this paper is to examine the impact of public expenditure on economic growth and poverty alleviation in developing countries like India. If poverty and inequality are high, the government may resort to distributive policies at the cost of long-term growth. The distributive policies and poverty alleviation measures fail to achieve success due to lack of good governance, lack of proper targeting and problems in the implementation of such schemes. On the other hand, if the nature of public expenditure is such that it enhances per capita income, it will help reduce poverty. Design/methodology/approach - – After analytical digression and construction of hypotheses panel regression has been done using state-level data in the Indian context to empirically verify the above propositions. Both Fixed effects and Random effects models have been used for this purpose. Findings - – The results show that in states where ratio of public expenditure on the development of infrastructure such as road, irrigation, power, transport and communication is higher, per capita income is also higher and incidence of poverty is lower indicating that economic growth is important for poverty alleviation and development of infrastructure is necessary for growth. Originality/value - – This study demonstrates how public policy and public finance can be used as instruments for removal of poverty.

Suggested Citation

  • Ritwik Sasmal & Joydeb Sasmal, 2016. "Public expenditure, economic growth and poverty alleviation," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 43(6), pages 604-618, June.
    • Handle: RePEc:eme:ijsepp:v:43:y:2016:i:6:p:604-618
    DOI: 10.1108/IJSE-08-2014-0161
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    Citations

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    Cited by:

    1. Masduki, Uki & Rindayati, Wiwiek & Mulatsih, Sri, 2022. "How can quality regional spending reduce poverty and improve human development index?," Journal of Asian Economics, Elsevier, vol. 82(C).
    2. Dieu Ne Dort Talla Fokam & Paul Ningaye & Celestin Chameni Nembua, 2020. "Ethnic Diversity Management and Poverty in Developing Countries," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 19(1), pages 47-60, June.
    3. Sugata Marjit & Ritwik Sasmal & Joydeb Sasmal, 2020. "Composition of public expenditure and growth of per capita income in Indian states: a political perspective," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 22(1), pages 1-17, June.
    4. Joydeb Sasmal & Ritwik Sasmal, 2020. "Public Debt, Economic Growth and Fiscal Balance: Alternative Measures of Sustainability in the Indian Context," Global Business Review, International Management Institute, vol. 21(3), pages 780-799, June.
    5. Qin, Xiaodi & Wu, Haitao, 2021. "Rural Infrastructure and Poverty in China," 2021 Conference, August 17-31, 2021, Virtual 314996, International Association of Agricultural Economists.
    6. Dewi Sovia & Abd. Majid M. Shabri & Aliasuddin & Kassim Salina, 2018. "Dynamics of Financial Development, Economic Growth, and Poverty Alleviation: The Indonesian Experience," South East European Journal of Economics and Business, Sciendo, vol. 13(1), pages 17-30, June.
    7. Sheng, Jichuan & Qiu, Wenge, 2022. "Water-use technical efficiency and income: Evidence from China's South-North Water Transfer Project," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    8. Sugata Marjit & Ritwik Sasmal & Joydeb Sasmal, 2020. "Structural Transformation, Service Sector Growth and Poverty Alleviation: The Role of Formal–Informal Interaction and Rising Informal Wage," Review of Development and Change, , vol. 25(2), pages 151-168, December.
    9. Timilsina,Govinda R. & Hochman,Gal & Song,Ze, 2020. "Infrastructure, Economic Growth, and Poverty : A Review," Policy Research Working Paper Series 9258, The World Bank.
    10. Sacchidananda Mukherjee & Shivani Badola, 2021. "Public Financing of Human Development in India: A Review," Indian Journal of Human Development, , vol. 15(1), pages 62-81, April.
    11. Galindo-Martín, Miguel-Ángel & Castaño-Martínez, María-Soledad & Méndez-Picazo, María-Teresa, 2021. "The role of entrepreneurship in different economic phases," Journal of Business Research, Elsevier, vol. 122(C), pages 171-179.
    12. Cordelia Onyinyechi Omodero, 2019. "Government Sectoral Expenditure and Poverty Alleviation in Nigeria," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(1), pages 80-90, June.
    13. Muhammad Sibt e Ali & Naeem ul Din & Syed Muhammad Faraz Raza & Syed Zain Ul Abidin, 2018. "Population, Poverty and Economic Development Nexus: Empirical Study of Some Selected Developing Countries," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 6(4), pages :458-476, December.
    14. Joydeb Sasmal & Ritwik Sasmal, 2017. "Government Spending With Public Debt, Economic Growth And Fiscal Balance: Evidences From India," Proceedings of International Academic Conferences 5908111, International Institute of Social and Economic Sciences.
    15. Montrone, Lorenzo & Steckel, Jan Christoph & Kalkuhl, Matthias, 2022. "The type of power capacity matters for economic development – Evidence from a global panel," Resource and Energy Economics, Elsevier, vol. 69(C).

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