Dynamic Linkages between Social Expenditures and Economic Growth: the Most Important Conclusions for Central European Countries

The role of the state within the neoliberal system is discussed in the approaches developed for social expenditures. Accordingly, the question of whether the state should stand back or provide the support needed by individuals has shaped the literaturę on social expenditures. It is thought that the increase in social expenditures affects public expenditures, and public expenditures may indirectly cause budget deficits. In addition, it is said that there is a decrease in social spending during periods of economic growth. All these dilemmas show that the idea that the country needs both producers and consumers while realizing economic growth has been pushed into the background. Here, the analyses of the relationship between social spending and economic growth are the arguments for the accuracy of this assumption. The aim of this study is to empirically analyze the long-term relationship between the economic growth and social expenditures of eight Central European countries and the causality relationship for 1999 and 2019. In the empirical findings, the cointegration relationship was determined between economic growth and social spending. Based on the findings of the causality analysis, it has been concluded that there is a bidirectional causality relationship between economic growth and social expenditures. Policy proposals are given in the conclusion section of the article.

The effect of social expenditures on human development in the European Union

Researchers and practitioners alike have long debated the role of high GDP growth strategies and social expenditures (SE) in ensuring a better distribution of income and reduction of poverty. This study is aimed at investigating the effectiveness of social expenditures by offering the use of a robust methodology. Our sample consists of 27 EU countries (further divided into pre- and post-2000 members) between 2005 and 2017. We used panel data to determine whether social expenditures have a positive effect on the World Bank generated Human Development Index (HDI).

Execution of the state budget of Ukraine in the conditions of the COVID-19 pandemic

The article analyzes the state of formation and efficiency of the State Budget of Ukraine. It has been established that budget expenditures exceed revenues and as a result, the budget has been formed over the last decade with a significant deficit, and the existence of a deficit leads to a movement in the "debt spiral". To implement the budget the Government is forced to borrow additional funds and attract them on acceptable terms, which has become increasingly difficult. Failure to receive the funds leads to late spending. The analysis of expenditures of the State Budget of Ukraine according to the functional classification is carried out, which testified to the main priorities of the state in modern conditions. Given Russia's aggression in the east of the country, it is logically justified to increase security and defense spending. However, it is advisable to review social expenditures, which are quite large in size and do not improve the quality of social services, on the contrary, restrain economic growth, the country's transition to an innovative model of development. In order to increase the efficiency of budget execution, the validity of macro indicators, it is advisable to introduce medium-term budget planning. Budget expenditures must be justified and balanced in order to achieve the most effective results of budget programs and the goals of the budget system of Ukraine. The study identified systemic shortcomings in the State Budget of Ukraine, which are repeated from year to year, as well as those that characterize the special year 2020 associated with the pandemic COVID-19. Emphasis is placed on the functioning of the domestic system of public financial control and its importance in reducing the volume of budget violations, the effectiveness of budget execution, promoting better functioning of the financial and budgetary system, ensuring sustainable dynamics of socio-economic development of the country.

The Impact of Tax and Expenditures Policies on Income Distribution: Evidence from Pakistan

Tax and social expenditure policies have a crucial role in income distribution. This study explores the potential role of taxation and social expenditure policies in income redistribution in South Asia. For this purpose, empirical analysis is conducted by Fixed Effect (FE) and Instrumental Variable (IV) FE models. The analysis suggests that both taxation and social expenditures policies effectively reduce income inequality in South Asia. These findings indicate that social spending and taxation can be used as a policy tool to redistribute income in developing countries. The results also indicate that higher social spending, increased direct taxes, and more reliance on foreign debts can ameliorate the income distribution. Based on the results, it can be suggested that for this region, with the low level of taxes, direct taxes, a large informal economy, and other weak features of tax administration, more reliance on direct taxes and social expenditure policies should be the primary tool for income redistribution.JEL Classification: H2, H5, I3How to Cite:Khan, S., & Padda, I. U. H. (2021). The Impact of Tax and Social Expenditure Policies on Income Distribution: Evidence from South Asia. Etikonomi, 20(2), xx – xx. https://doi.org/10.15408/etk.v20i2.18121.

The Policy Road to Socialism

In the standard formulation, the Marxist theory of the state implies that socialism requires revolution: Reformist social policy generates capital flight and capital flight undermines reform. I show that this mechanism, while plausible, turns out to have little empirical merit. State theory correctly points to an “accumulation” function whereby capitalist states depend on revenue and must therefore worry about the reforms that undermine profitability. But this accumulation function has been overwhelmed, historically, by a more powerful “legitimation” function: Popular social expenditures in rich capitalist democracies tend to grow and only rarely decline, even during the so-called neoliberal period. This article considers both sides of this debate. First, I propose (and predict) a path to socialism by way of mushrooming social policy. And second, I argue that if revolution is the only hope for socialism, then socialism is off the table; the revolution must be betrayed.

UNRAVELING THE (INTRINSIC) LINKAGE BETWEEN SOCIAL SPENDING AND REGIONAL DEVELOPMENT: AN EMPIRICAL ANALYSIS FOR EUROPEAN UNION COUNTRIES

Theoretical approaches and place-specific solutions are required to face with the intrinsic linkage between social welfare and macroeconomic stability in advanced economies, especially in Europe. In this regard, the 2007 recession has influenced extensively the wide spectrum of social policies applicable in the European Community. New socioeconomic divides emerged and fiscal austerity urged Member States to resettle policy discourses, advancing social needs in a more effective way. In line with this evidence, our commentary discusses recent literature and it outlines policy implications of different political, institutional and socioeconomic settings. By analyzing cross-country variations in the shape and extent of welfare policies at the European level, our study evaluates apparent (and latent) performances of welfare systems in a comparative perspective, with a specific focus on Southern European countries. The existence of a latent relationship between social policy expenditures (SPE) and per-capita GDP was demonstrated. However, social expenditures may differ for a given level of income: for instance, Latvia had a lower level of social expenditures given its income level. Italy, Greece, Spain and Portugal were clustered together displaying a lower share of social spending in the total GDP in respect with the remaining European countries. This comparison suggests how Mediterranean countries are institutionally fragile and with a moderately higher level of corruption in respect with North-western countries. The results of this work contribute to bridge the semantic dichotomy between theoretical approaches and empirical findings in socioeconomic policy impact analysis.

Long-term budget planning in the context of globalization and its socio-economic significance

Research background: The process of globalization increases the possibility of a more equitable distribution of income and national wealth, which contributes to the solution of social problems and ensures the development of the material base of human potential. In these conditions, the issues of budget planning of mandatory budget expenditures for the social sphere, in particular for education. With the use of simulation modeling, it is possible not only to implement budget planning more effectively, adjust current social expenditures, but also to increase the horizon of long-term budget planning, which is especially important in conditions of high financial dependence. Purpose of the article: to study the use of simulation modeling for long-term budget planning of mandatory budget expenditures in the social sphere at the subnational level. Methods: we have researched based on the application of the “Any Logic” modeling method for long-term budget planning and adjustment of current social expenditures. Findings & Value added: the study conducted by the authors allows us to conclude that the use of “any logic” for long-term financial planning in the context of globalization makes it possible for States to model social expenditures in the current and future periods. Based on official statistics, the forecast model of mandatory budget expenditures for the social sphere takes into account various factors (changes in demography, the number of recipients of social services, etc.) and provides a forecast of socio-economic development. Long-term budget planning based on simulation models allows you to adjust current social programs, which will improve the quality of life in the context of globalization.

Methodology for assessing the effectiveness of financing social expenditures considering the risk

  Currently, all the prerequisites have been met for transitioning to the qualitatively higher level of public finance management that correspond to the generally accepted principles and international standards. The responsibility for choosing the most effective methods of public expenditure management increases with the development of innovation economy. This actualizes the problem of improving the state financing of social expenditures. The subject of this research is the assessment of the effectiveness of government spending in the area of social policy, considering the range of indicators that reflect socioeconomic development of the regions. The score is suggested for assessing the effectiveness of government spending in the area of social policy based on the standardized values of the criteria that describe the aspects of social policy of the regions and the peculiarities of their economic development. The proposed methodology for integrated assessment of the effectiveness of government spending takes into account the trends in the criteria that characterize the level of economic development of the regions, as well as possible variability of budget flows aimed at financing social expenditures. Practical implementation of such methodology allows classifying the territories by the level of efficiency of social expenditures, which facilitates rational financial decisions on the formation of resources that ensure sustainable economic growth and development of strong human capital.