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Public Expenditure’s Role in Reducing Poverty and Improving Food and Nutrition Security: Cross-Country Evidence from SPEED Data

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Abstract

Knowledge gaps remain as to how public expenditures (PE) contribute to key SDG outcomes, including eradicating poverty and hunger and improving food and nutrition security in sustainable manners (SDGs 1 and 2). This study partly fills this knowledge gap using the Statistics on Public Expenditures for Economic Development (SPEED data) and various country-level panel data. We find that greater PEs for agriculture and, to a lesser extent, health sectors consistently reduce poverty and improve access to basic water and sanitation services, reduce child stunting and overweight, undernourishment, and food prices. These relationships are somewhat stronger for countries classified as low- or lower-middle-income in 2000. Greater PEs for education and social protection, which have been generally higher than PEs for agriculture and health in terms of allocations, have had more mixed effects on these outcomes.

Résumé

Des lacunes de connaissances subsistent quant à la manière dont les dépenses publiques (DP) contribuent aux principaux résultats des ODD, y compris l'éradication de la pauvreté et de la faim, et l'amélioration de la sécurité alimentaire et nutritionnelle de manière durable (ODD 1 et 2). Cette étude comble en partie cette lacune utilisant les Statistiques sur les Dépenses Publiques pour le Développement Économique (données SPEED) et divers données de panel au niveau des pays. Nous constatons que des DP plus importantes dans l'agriculture et, dans une moindre mesure, dans les secteurs de la santé, réduisent systématiquement la pauvreté ; ells améliorent l'accès aux services de base en matière d'eau et d'assainissement ; et ells réduisent le retard de croissance chez les enfants, le surpoids, la sous-alimentation, et les prix des aliments. Ces relations sont quelque peu plus fortes pour les pays classés comme à faible revenu ou à revenu intermédiaire inférieur en 2000. Des DP plus importantes pour l'éducation et la protection sociale, qui ont généralement été plus élevées que les DP pour l'agriculture et la santé en termes d'allocations, ont eu des effets plus mitigés sur ces résultats.

Resumen

Aún existen brechas de conocimiento sobre cómo los gastos públicos (PE) contribuyen a los principales resultados de los ODS, incluyendo la erradicación de la pobreza y el hambre, y el mejoramiento de la seguridad alimentaria y nutricional de manera sostenible (ODS 1 y 2). Este estudio rellena, en parte, esta brecha de conocimiento, utilizando las Estadísticas sobre Gastos Públicos para el Desarrollo Económico (datos SPEED) y varios datos de panel a nivel de país. Encontramos que mayores gastos públicos en agricultura y, en menor medida, en el sector de la salud, reducen consistentemente la pobreza; mejoran el acceso a servicios básicos de agua y saneamiento; y reducen el retraso en el crecimiento infantil y el sobrepeso, la desnutrición, y los precios de los alimentos. Estas relaciones son algo más fuertes para los países clasificados de ingresos bajos o ingresos medios-bajos en 2000. Mayores gastos públicos en educación y protección social, generalmente más altos que los gastos públicos en agricultura y salud en términos de contribuciones, tienen efectos mixtos en estas conclusiones.

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Data availability

Data used in this study are available from the author upon reasonable request.

Notes

  1. Due to the space limitation, we refer to Takeshima et al. (2020) for a more detailed literature review on PEs for various sectors and development outcomes.

  2. We also focus on PEA, PEH, PEE, and PES as these are more readily available for a sufficient historical time span in cross-country PE data like SPEED data (Yu et al. 2015), which enables us to obtain a sufficient sample size for the analyses of a broad set of outcomes that we used.

  3. We also estimated models using slightly different durations of lags, and found that results are generally robust (available from authors upon request).

  4. Averaging or using lag can mitigate endogeneity issues in OLS specifications (e.g., Yogo 2004; Takeshima and Liverpool-Tasie 2015).

  5. We also checked the correlations between PEs in each sector. The correlation coefficients are generally low, ranging between -0.4 to 0.4. Separately accounting for PEs in different sectors helps us correctly attribute the associations with outcomes to PEs in each sector.

  6. Within each regression, PE variables for all 4 sectors are estimated jointly, and their statistical significance is interdependent. Bonferroni correction is not applied to account for the number of variables within the same regression. This is consistent with the standard practice of applying the Bonferroni correction based on the number of outcome variables which can be considered relatively more independent, while not applying the correction based on the number of coefficients estimated within a particular regression, which are inter-related hypotheses (e.g., Mason et al. 2017).

    Similarly, the analyses for Tables 6 and 8, and Tables 9, 10, 11, and 12 are conducted as robustness checks to the main results in Tables 5 and 7. Therefore, we apply the same Bonferroni correction separately to each of Tables 6 and 8, and Tables A1–A4, but do not combine Bonferroni correction between Tables 5 and 7, and other Tables (so that the Bonferroni correction is only based on the 36 combinations of outcomes and measurement of public expenditures).

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Acknowledgements

I thank the journal editor and two anonymous reviewers for their constructive comments. I also thank the CGIAR Research Program on Policies, Institutions, and Markets (PIM) which was led by the International Food Policy Research Institute (IFPRI), and the CGIAR Research Initiative on National Policies and Strategies (NPS). I would like to thank all funders who supported this research through their contributions to the CGIAR Trust Fund: https://www.cgiar.org/funders/. I also benefited from dialogues with Xinshen Diao, Samuel Benin, Tewodaj Mogues, Bingxin Yu and Jenny Smart. The author is responsible for any remaining errors.

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    Hiroyuki Takeshima

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Takeshima, H. Public Expenditure’s Role in Reducing Poverty and Improving Food and Nutrition Security: Cross-Country Evidence from SPEED Data. Eur J Dev Res (2024). https://doi.org/10.1057/s41287-023-00623-8

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