The evolution and convergence of the government expenditure composition in the OECD countries: an analysis of the functional distribution

The composition of the public expenditure affects the long-run growth rate (Barro, 1990, Devarajan, Swaroop and Zou, 1996). This paper has explored the existence of convergence in the structure of government expenditure by functions in the OECD countries for the period 1970-1998 and the perspectives of this process to persist in the future. The results obtained first through the similarity index and afterwards using the usual convergence indicators (ƒÒ, ƒã and ƒ×), adapted to the analysis of the breakdown of public expenditure, point out to the existence of a distribution approximation. Nevertheless, we have found that the majority of expenditures were near to the steady-state, which differs across countries. This reveals that there are some individual factors that impede the convergence to a single structure in the long run. This could be one of the explanations of the difference observed among economic growth rates in developed countries.