Public Spending and Governance Performance

The main objective of the chapter is to study the interaction between the level and composition of government expenditure and governance performance in Europe and in MENA countries. The perceived level of corruption provides a possible measure of governance performance. The idea is that more corruption entails greater than optimally volumes of public expenditure and an inefficient allocation of this. The study involves a descriptive and a simple econometric analysis. Results are enlightening and point out that total government expenditure appears to be positively correlated to poorer governance performance, and hence to more corruption, only when the volumes of public expenditure is already high.