Public spending is the total monetary amount that the public sector disburses to carry out its activities.
The public sector, as an economic agent, has different objectives and functions. Among them, there are objectives such as reducing inequality, redistributing wealth or satisfying different needs to the citizens of a country.
In this sense, public spending is the money that the public sector spends in carrying out a series of activities.
The opposite of public spending is public income .
Types of public spending
Not all expenses are the same. As in the private sector, we can classify spending into different types. The types of public spending are:
- Current expenditure:They contain the amount of money destined for the most basic operations of the State. For example, expenses in civil servants’ salaries or in the provision of certain public services.
- Capital expenditure:This expense includes that destined to obtain assets (tangible and intangible). The purchase of fixed assets to carry out current activities is also added at this point. For example, the purchase of trains.
- Transfer expense:This is the monetary amount (sometimes in the form of capital) that the State allocates to businesses and families. For example, unemployment benefits are transfers.
- Investment expenditure:Unlike capital expenditure, investment expense is considered when the expenditure aims to create, increase, improve or replace existing public capital.
Objectives of public spending
As we said at the beginning of the entry, the public sector aims to achieve some ends. To achieve them, public spending is often used. We say on many occasions, since there are cases in which an increase in spending does not allow certain ends to be achieved. Although it is true that, in most cases, it helps to get them.
Among the main objectives of public spending are:
- Distribute wealth
- Improve access to citizens’ health
- Ensure justice
- Improve employment
- Promote economic growth
- Safeguard the environment
- Allow access to education
- Guarantee a decent life
- Armed forces
We could add many more, although the previous ones are a faithful reflection of what the States usually try . Of course, it is not always like this. For example, investment in education, health or public services in general will depend on each country.
Thus, there are countries that invest more in education and others less, countries that invest more in health and others less. The same thing happens with justice, starting because each country has its own laws.