Tag Archives: Govertment ex;penditures

Public Sector Size and Quality

Periklis

Dr. Periklis Gogas is an Associate Professor of Economics, International Economics Department, Democritus University of Thrace, Greece

Matthaiou

 

Ms. Maria Matthaiou is a PhD Candidate in Economics, Democritus University of Thrace, Greece

 

It has been widely thought that the main cause of Greek crisis is the size of the Greek public sector, i.e. both the percentage of government spending in the total GDP and the number of public servants of the Greek government. Nonetheless, the international experience shows that a large public sector (as a percentage of the country’s GDP) is not necessarily restrictive to growth and prosperity. In the following graph, we can see the size of the government in various European countries and their relative effectiveness. We can easily observe that Greece with a 48% share of government spending in total GDP is below the average. Nonetheless, Greek government spending effectiveness in the quality produced is trailing the other countries by far. France, Austria and the Scandinavian countries that are members of the EU sustain a far larger government sector but the quality of the services produced is significantly larger than Greece’s. Moreover, these countries exhibit a higher per capita income and standard of living as compared to Greece.

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