Public expenditure and economic growth with special reference to Portugal

Abstract

The present study is an attempt in applied research to examine the growth of the public sector in a developing economy. All the analysis, from the collection of the original data and its treatment, has been directed towards the determination of the factors which contributed more significantly to that growth, and to establishing its relations with the historical (economic, political and social) events in a particular country: Portugal. In the end, an interpretative scheme had to be evolved to explain the phenomenon observed. However, apart from the relations which emerged, and the value of the explanations advanced, there is a service for which we believe we can lay claim; that of having taken the pains of collecting; and grouping the thousands of items of the Portuguese government accounts since the beginning of the century in categories suitable for the analysis of the economist; and this did not represent the minor effort in our task. Such a work had not been undertaken before, and no similar study, even of a smaller coverage, or for a shorter period of time, existed. We hope it will contribute to throw some light into the process of the transformation of the Portuguese economy during the last six decades. In presenting the data for the period aftex- 1930, it has "been possible to find in an almost adequate form, a breakdown of the expenditures of the central government into economic aim functional categories, in "Estatisticas Financeiras" - a publication of the National Institute of Statistics. For the period up to 1930, we had no other solution but to go through the two annual volumes of the original accounts of the state, which in their :,ld form, and in the expression of the legislator who reformed them, "cost one thousand escudos, weight 12kg., have thousand pages, and nobody reads them". In addition to that, many data on expenditures which, by every meaningful criterion or definition of the public sector belonged to that sector, but due to administrative or some other reason had been excluded from the formal structure of the "unitary" budget and remained scattered through a series of publications and reports (or not published at all), had to be collected separately or obtained from the archives and through kind co-operation of the bodies concerned. Now they are, at least, put together and systematically classified. If the interpretations can be challenged, we hope that the result of this effort of classification will remain, inviting new explanations and further research. The first step has been done.