The impact of structural adjustment reforms on public sector expenditures: Evidence from developing countries

The paper attempts to analyze the impact of structural adjustment policy reforms on aggregated and disaggregated public expenditure. The study investigates the extent to which structural adjustment reforms were able to reshape public expenditure in developing countries as expected. A comparative analysis has been made of aggregated and disaggregated public expenditure before and after implementing structural adjustment reforms. The model is tested using panel data of sixteen developing countries for the period of 1975-95. The fixed effects technique was used to control for country-specific differences. It was found that although some of the developing countries from our sample have shown a downward trend in total public expenditure, the results become statistically insignificant when we use panel data for total public expenditure. There is evidence that the downward trend in total public expenditure may be due to a cut in public spending on health and education.Publisher's Versio