The Efficiency of Public Expenditure in Russia

Abstract

Every country faces two crucial questions of fiscal governance: 1) how much money should the government spend overall; and 2) what expenditure items should be financed using public resources and to what extent? This paper examines the existing tendency in public spending policy in Russia and attempts to answer questions on the optimal size of the government and efficient structure of public outlays. Methods of international comparison and cross-regional analysis were applied in the research. International comparisons show that public expenditure in Russia as a percentage of GDP is very close to average expenditure in OECD countries. At the same time, investigation of expenditure across Russian regions shows negative correlation between the growth rate of per capita income and public spending, although positive influence of some expenditure items on growth is evident.