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How public expenditure helps on developing economy of country?

Role of Public Expenditure in Developing Economies: Boosting Growth and Prosperity

Public expenditure plays a crucial role in the development of a country's economy. It refers to the spending of government funds on various programs and projects that benefit thciety as a whole. In developing economies, public expenditure is even more critical as it helps to address the deficiency of capital and infrastructure, which hampers economic growth. Let's take a closer look at the various ways in which public expenditure helps in developing economies.

public expenditure

1. Enhancing Social and Economic Overheads

Developing economies face a shortage of essential infrastructure like roads, railways, hospitals, schools, and technical institutions. These social and economic overheads are crucial for the growth and development of the economy. However, private sources cannot generate sufficient capital for their development. Public expenditure is necessary to build and maintain these infrastructures, which boosts economic growth.

2. Balancing Regional Growth

In developing countries, it is crucial to bring about balanced regional growth. Special attention must be given to the development of backward and underdeveloped areas. This requires significant amounts of funding, which can only be achieved through public expenditure.

3. Boosting Agriculture and Industrial Development

Agricultural development is the foundation for industrial development in developing economies. The government must allocate heavy expenditure towards irrigation, power, seed, farm, fertilizer factories, warehouses, etc., to support the agriculture sector. Similarly, public enterprises such as steel plants, electricals, heavy engineering, and machinery-making factories are essential to promote industrial development.

4. Developing Mineral Resources

Mineral resources play a vital role in the economic development of a country. The government needs to undertake exploration and development schemes for essential materials like gas, petroleum, and coal. Public expenditure plays a crucial role in this process, as private enterprises may not have the required resources to carry out such activities.

5. Investing in Education

Education is a fundamental factor in human development and productivity. It also plays a crucial role in promoting democracy. Developing economies need to invest heavily in education, which includes creating various types of educational facilities and specialized institutes for medical and technical education.

6. Defense Expenditure

Defense is a crucial factor in public expenditure, especially in modern times. With the increase in the arms race among nations, defense expenditure has also increased significantly. This expenditure contributes to the overall increase in public expenditure.

7. Controlling Inflation

Rising prices and inflation have a severe impact on developing economies. The government needs to maintain its expenditure to carry out its functions and maintain the supply of public goods. During inflation, the government may have to pay additional dearness allowance to its employees, which increases the burden on public expenditure.


In conclusion, public expenditure plays a vital role in the growth and development of developing economies. It is necessary to allocate funds to various programs and projects that benefit the society as a whole. By addressing the deficiency of capital and infrastructure, balancing regional growth, promoting agriculture and industrial development, developing mineral resources, investing in education, and controlling inflation, developing economies can achieve growth and prosperity.


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