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Wagner Public Expenditure

Wagner's Theory, presented by Samuel Paik, explains that public expenditure increases as economies grow, driven by factors like industrialization and rising demand for public services. The theory highlights the expanding role of government in economic and social development, although it faces criticism for not accounting for government inefficiency and varying applicability across different economies. Despite its criticisms, Wagner's Law remains relevant today, emphasizing the relationship between economic growth and public spending while considering country-specific factors.

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Samuel paik
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652 views10 pages

Wagner Public Expenditure

Wagner's Theory, presented by Samuel Paik, explains that public expenditure increases as economies grow, driven by factors like industrialization and rising demand for public services. The theory highlights the expanding role of government in economic and social development, although it faces criticism for not accounting for government inefficiency and varying applicability across different economies. Despite its criticisms, Wagner's Law remains relevant today, emphasizing the relationship between economic growth and public spending while considering country-specific factors.

Uploaded by

Samuel paik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Wagner’s Theory

Presented by Samuel paik


I MA ECONOMICS
Introduction
• • Definition of public expenditure:Public expenditure is
government spending on public services, welfare, and
infrastructure, funded by taxes and borrowing.

• Adolf Wagner (1835–1917) was a German economist known


for Wagner’s Law on rising public expenditure

• • Importance of Wagner’s Law in economics:Wagner’s Law


explains why public spending rises with economic growth,
guiding policymakers in managing government expenditure.
Key Assumptions
• 1. Economic development leads to increased
government functions
• 2. Industrialization and modernization
demand more public services
• 3. Governments expand social welfare
programs
Wagner’s Law – Concept
• Wagner’s Law states that public expenditure increases as
an economy grows.
Economic growth leads to higher income levels and
greater demand for public services.
Governments spend more on education, healthcare,
infrastructure, and social welfare.
Industrialization and urbanization require more state
intervention and public investment.
• The law highlights the expanding role of government in
economic and social development.
Graphical Representation
Graph of Wagners theory
Factors Influencing Public
Expenditure Growth
• • Economic growth and income levels
• • Urbanization and industrialization
• • Social and cultural developments
• • Technological progress
• • Rising population
Criticism of Wagner’s Law
• • Does not account for government
inefficiency
• • Assumes a continuous increase in spending
• • May not apply to all economies, especially
underdeveloped ones
Conclusion

The size of the government sector grows over time.


Economic progress naturally leads to higher public expenditure.
• It contradicts classical economic views that the government
should play a minimal role in the economy.
• • Modern relevance in developing and developed:
Wagner’s Theory remains relevant today, but with modifications
based on country-specific factors like governance, globalization,
and fiscal constraints. While economic growth still leads to higher
public expenditure, the balance between government intervention
and private sector participation varies across nations.
References
The Growth of Public Expenditure in the United
Kingdom” – Alan T. Peacock & Jack Wiseman

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