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21. Defence expenditure and public debt in Greece: A non-linear relationship

Author:
Ioanna Bardakas, Dimitris Doulos, and George Andrew Zombanakis
Publication Date:
03-2023
Content Type:
Journal Article
Journal:
Security and Defence Quarterly
Institution:
War Studies University
Abstract:
The aim of this paper is to consider and evaluate the widely–used argument attributing the growth of the public debt of Greece in recent decades to the country’s defence expenditure. We employ a two-equation model that focuses on the determinants of the military debt and how this has affected the public debt. The source of our military debt data is the Hellenic General Accounting Office, an option taken to cope with confidentiality issues. Finally, we insist on focusing on the expenditure on defence equipment imports rather than the total defence spending that the literature mostly covers, for reasons extensively analysed. Our methodology firstly assumes a linear relationship between military debt and public debt. We solve the system using 3SLS to obtain consistent and efficient estimates to derive interesting policy implications. The employment of a non-linear quadratic form not previously adopted proves to be superior in terms of performance and reveals the complexity of the above relationship. These point to the conclusion that the defence equipment purchases made since the beginning of the eighties have not had a decisive impact on the public debt of Greece. The defence equipment purchases made since the beginning of the eighties represent a very low percentage of the total public debt of Greece. Moreover, these are considered to be an investment activity rather than consumer spending, which has been acknowledged in the literature as the primary cause of Greece’s high indebtedness and the ensuing economic crisis.
Topic:
Security, Public Debt, Public Spending, Economic Security, Defense Spending, and Military
Political Geography:
Europe and Greece

22. Models of Measuring Cooperation: Brazil and Mexico

Author:
José Alejandro Sebastian Barrios Díaz
Publication Date:
05-2023
Content Type:
Journal Article
Journal:
Contexto Internacional
Institution:
Institute of International Relations, Pontifical Catholic University of Rio de Janeiro
Abstract:
Over the past few decades, South-South cooperation has grown in terms of actors, volume, geographic reach, instruments, and modalities, but, statistics on this type of cooperation have been incomplete and fragmented. The technical, political, and institutional challenges in measuring South-South cooperation are emphasised by countries like Brazil and Mexico, chosen as cases to be analysed in the text. The article explores the experiences in measuring international cooperation provided by Brazil and Mexico, starting with the characterization of the two national trajectories in the quantification and the modalities that determine the process, and analyses the main similarities and differences presented between the cases. The analysis of the countries studied in this article evidence the different institutional designs of international cooperation and the establishment of measurement models elaborated by governments based on their own realities of international cooperation, indicating, therefore, that the process of measuring international cooperation is not only a statistical issue, but above all, a political one. Seen in these terms, South-South cooperation measurement exercises have provided more knowledge about how cooperation activities are organized and their relation to global development agendas, and have also consolidated the transparency of public expenditure.cooperation and development; South-South cooperation; public expenditure; Brazil; Mexico; measurement.
Topic:
Development, International Cooperation, Global South, Public Spending, and Measurement
Political Geography:
Brazil, South America, Latin America, and Mexico

23. The Cyclical Behaviour of Government Spending for Social Protection: Is the OECD Methodology Robust?

Author:
Aleksandr Arsenev, Philipp Heimberger, and Torben Schütz
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Spending elasticities measure the reaction of different government spending components to the business cycle. They are important inputs for fiscal forecasts, and they are particularly relevant in the context of European Union (EU) fiscal rules, as elasticity estimates enter the estimation of fiscal space. This paper analyses the sensitivity of the estimation method used by the Organisation for Economic Co-operation and Development (OECD) and the European Commission to obtain government spending elasticities by focusing on 11 EU countries in the 1995-2020 period. Our results suggest that spending elasticities are sensitive to small variations in data and model specification. For most EU countries, we reject the assumption that only unemployment spending responds to cyclical variations. While unemployment spending is indeed a major driver of counter-cyclical social spending, other categories of social spending also show signs of responding to the business cycle.
Topic:
Budget, European Union, Finance, Macroeconomics, Public Debt, Social Spending, Public Spending, and Fiscal Deficit
Political Geography:
Europe, Greece, France, Poland, Germany, Denmark, Romania, Spain, Italy, Sweden, Austria, and Czechia

24. Riskier Bets, Smaller Pockets: How National Oil Companies Are Spending Public Money Amid the Energy Transition

Author:
David Manley, Andrea Furnaro, and Patrick Heller
Publication Date:
11-2023
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Expecting a slow energy transition away from fossil fuels, national oil companies (NOCs) will likely invest USD 1.8 trillion in upstream oil and gas developments and expansions over the next 10 years. But $425 billion—a quarter of the NOCs’ planned investment—will be unprofitable if oil demand falls to 55 million barrels a day, in line with the International Energy Agency’s Announced Pledges Scenario. This is the highest risk portion of the portfolio and has doubled since the Russian invasion of Ukraine. NOCs will only profit from around $1.2 trillion of investment (71 percent of the total NOC investment) if humanity fails to contain global temperature rise to below 1.5°C, pushing the world toward climate catastrophe. While NOCs are making riskier bets, their debt is rising in some regions. Between 2011 and 2022, the average debt to total asset value of NOCs in sub-Saharan Africa, the Middle East and North Africa, and Latin America rose by a third. Governments’ financial pockets are shrinking. Between 2011 and 2021, the average government debt as a proportion of gross domestic product doubled. Yet many NOCs have not publicly acknowledged the growing risks of the energy transition. They and their governments must examine how they can generate sufficient revenue and energy for citizens without making even riskier bets with public money.
Topic:
Oil, Business, Public Spending, and Energy Transition
Political Geography:
Global Focus

25. Prioritizing Public Spending on Health in Lower-Income Countries: The Role of the Global Financing Facility for Women, Children and Adolescents

Author:
Janeen Madan Keller, Rachel Silverman, Julia Kaufman, and Amanda Glassman
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
The Global Financing Facility (GFF), launched in 2015, is a partnership backed by a multi-donor World Bank trust fund that aims to “prioritize and scale-up evidence-driven investments to improve reproductive, maternal, newborn, child, and adolescent health and nutrition (RMNCAH-N) interventions” in low- and lower middle-income countries. A major component of the GFF’s operational model is centered around the investment case, described by the GFF as “a description of the changes that a country wants to see with regard to reproductive, maternal, newborn, child, and adolescent health (RMNCAH) and a prioritized set of investments required to achieve these results.” Looking retrospectively at investment cases and associated ongoing World Bank operations, this paper aims to shed light on specific aspects of the GFF’s operating model, approach, theory of change, and results to date related to the “development of a costed and prioritized investment case,” and whether the investment case helps to prioritize public spending on health in the real world. The portfolio-wide findings suggest that the GFF delivers a clear value-add within the global health architecture by directing more funding to flow directly through governments via increased World Bank lending for RMNCAH-N (especially in the context of COVID-19-related service disruptions and fiscal contractions). The role of the investment case in aligning and prioritizing resources behind a consensus set of highest-value RMNCAH-N interventions within a specific funding envelope is less well documented in the public domain; GFF efforts to directly influence government RMNCAH-N spending decisions and their efficiency seem to occur primarily through follow-on resource mapping and expenditure tracking. The paper concludes with three recommendations for the GFF and its donors: (1) pursue a deliberate strategy for prioritization of RMNCAH-N services and products within the realistic budget constraint to advance evidence-based decisions on certain trade-offs; (2) increase transparency and public visibility into GFF-supported activities and funding, especially related to RMNCAH-N product procurement and overall resource tracking; and (3) explore incentives for increased donor co-financing within the framework of World Bank projects as a strategy to pool and channel more resources through government coffers.
Topic:
Health, Children, Women, Public Spending, and Gender
Political Geography:
Global Focus

26. Lessons for the Age of Consequences: COVID-19 and the Macroeconomy

Author:
Servaas Storm
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Based on comparative empirical evidence for 22 major OECD countries, I argue that country differences in cumulative mortality impacts of SARS-CoV-2 are largely caused by: (1) weaknesses in public health competence by country; (2) pre-existing country-wise variations in structural socio-economic and public health vulnerabilities; and (3) the presence of fiscal constraints. The paper argues that these pre-existing conditions, all favorable to the coronavirus, have been created, and amplified, by four decades of neoliberal macroeconomic policies – in particular by (a) the deadly emphasis on fiscal austerity (which diminished public health capacities, damaged public health and deepened inequalities and vulnerabilities); (b) the obsessive belief of macroeconomists in a trade-off between ‘efficiency’ and ‘equity’, which is mostly used to erroneously justify rampant inequality; (c) the complicit endorsement by mainstream macro of the unchecked power over monetary and fiscal policy-making of global finance and the rentier class; and (d) the unhealthy aversion of mainstream macro (and MMT) to raising taxes, which deceives the public about the necessity to raise taxes to counter the excessive liquidity preference of the rentiers and to realign the interests of finance and of the real economy. The paper concludes by outlining a few lessons for a saner macroeconomics.
Topic:
Global Recession, Economic Inequality, Macroeconomics, Austerity, Public Health, COVID-19, Health Crisis, and Public Spending
Political Geography:
Global Focus

27. Funding the ERP: Analysis of funding for the implementation of the Education Response Plan (ERP) for refugees and host communities

Author:
Oxfam Publishing
Publication Date:
12-2021
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
This paper is an analytical review of the financial performance of the Education Response Plan for refugees by the end of June 2020. This analysis gives an in-depth review of the education financing for Government of Uganda supported schools in refugee settlements in Lamwo District Local Government. The total contribution of the Government of Uganda to the actual ERP spend was USD 11.86 million (9.38%). The multilateral donors contributed most to the ERP between year 0 and year 1, with a total contribution of USD 38.69 million (31%). This paper was written by The Centre for Budget and Tax Policy.
Topic:
Education, Refugees, Public Spending, and Schools
Political Geography:
Uganda and Africa

28. Optimizing the Governance and Performance of Public Enterprises In Cameroon

Author:
Steve Tametong
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
Defined as economic units with legal and financial autonomy carrying out industrial and commercial activities and whose share capital is wholly or mainly held by a legal person under public law, public enterprises occupy a major place in the economic development policy of the State in Cameroon. The many reforms that have taken place in this key sector have, for the most part, been directed towards the search for performance and the promotion of sound corporate governance. However, this double objective remained a real challenge under the empire of law n°99/016 of December 22, 1999 on the general status of public establishments and public and semi-public sector companies, which had repealed order n°95/003 of August 17, 1995 governing public and semi-public sector companies. To echo this, the Technical Commission for the Rehabilitation (CTR) of public and parapublic sector companies revealed in its 2019 Report that the 50 public entities whose performance was analysed showed a 15.7% drop in turnover compared to the 2018 financial year, and an overall net result of CFAF -59.5 billion, down by -6.4% compared to 2018. Also, the biggest losses were recorded in the combined sectors of “hydrocarbons, water and electricity” and “industry and commerce“. Moreover, out of a target of 53 billion in 2019 for contributions from public enterprises to the state budget, only 12 billion had been paid out by the end of the year, i.e. an achievement rate of 21.94%. These under-performances are the result of an extraverted governance whose causes are not exclusively managerial. According to Professor Henri Modi Koko Bebey, “political and administrative burdens also explain, at least in part, the poor results obtained so far”.. Therefore, the link between governance and the performance of public enterprises is inseparable. This policy brief is intended to be a plea for strengthening the performance-oriented governance of public enterprises. To achieve this, it first outlines the renovated legal framework and highlights the classification of public enterprises (I); then, it questions, based on a few illustrative cases, the governance of public enterprises and its impact on their performance (II); finally, it makes recommendations for better governance to improve the performance of public enterprises in Cameroon (III).
Topic:
Governance, Public Sector, Public Spending, and Efficiency
Political Geography:
Africa and Cameroon

29. Building back better after the COVID-19 pandemic

Author:
Miguel Jaramillo and Bruno Escobar
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Group for the Analysis of Development (GRADE)
Abstract:
In this policy-oriented paper, we provide a pre- and post-pandemic socioeconomic analysis of Peru, along with a financially sustainable five-year Building Back Better recovery plan, which emphasizes the urgency of addressing some of the country’s structural weaknesses. We underscore the importance of public investment for this effort, but widen the focus to include current public expenditure, in order to take steps towards building a more universal social protection system. We show that this also contributes to reducing the gender imbalances in the labor market that the pandemic exposed and exacerbated. We provide a financial programming exercise that demonstrates that the plan is financially responsible under a reasonable fiscal rule. Four core ideas stand out from our analysis. Firstly, while public investment can be key to reigniting economic growth, it does not go very far in tackling structural weaknesses. Secondly, public spending in health can actually achieve this from two fronts: by beginning to build a universal access social protection system and by addressing gender imbalances in the labor market. Thirdly, focusing public discussion on social protection enables a broader approach to policy reform by including formal employment and productivity enhancing reforms, which are essential for the sustainability of a broad social protection system. Finally, we also show that the sector mix in public investment has an impact on employment results, both in terms of the volume of jobs generated and their gender composition.
Topic:
Health, Inequality, COVID-19, Socioeconomics, Public Spending, and Gender
Political Geography:
South America and Peru

30. It’s Time for a New Deal

Author:
Constantine Michalopoulos
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The prospects of the Greek economy are mostly good with growth continuing for the fourth straight year. But there is a sense of disappointment, as the recovery has not been very strong and pre-crisis income levels will not be regained for another decade. There are two main reasons for the sluggish recovery: The European creditors have imposed on Greece the requirement to run a primary budget surplus of 3.5% of GDP for five years to ensure that they get repaid—a requirement that constricts growth of the Greek private sector—through heavy taxation of consumers and business. And domestic investment is sluggish, although there are plenty of unutilized resources, such as those provided by the European Structural Funds. There is a need for a new deal with the European Institutions: the Europeans should be more relaxed about getting repaid because of Greece’s much improved access to the European capital markets and be willing to accept a Greek government commitment to a significantly lower primary budget surplus for the next several years. In exchange the Greek government should commit to a commensurate increase in domestic investment through reforms of the banking sector as well as greater public sector investment spending.
Topic:
Government, Financial Crisis, Economy, Economic Growth, and Public Spending
Political Geography:
Europe and Greece