This book discusses the changing role of government finance in the twentieth century. It documents the enormous increase in government spending throughout the 1900s across all industrialized countries. However, the authors find that the growth of the welfare state over the past thirty-five years has not brought about much additional social and economic welfare. This suggests that public spending in industrialized countries could be much smaller than today without sacrificing important policy objectives. For this to happen, governments need to refocus their role on setting the 'rules of the game', and the study provides a blueprint for institutional and expenditure policy reform. After a detailed account of reform experiences in several countries and the public debate regarding government reform, the study closes with an outlook on the future role of the state, which is crucial in that globalization may require and people want much 'leaner' but not 'meaner' states.
Part I. The Growth of Government: A Historical Perspective: 1. The growth of government since 1870; 2. The composition of public expenditure; 3. Revenue, deficits, and public debt; Part II. Gains from the Growth of Public Expenditure: 4. Historical evidence on government performance; 5. The size of government and its performance; 6. The experience of the newly-industrialized economies; Part III. The Role of the State and Government Reform: 7. Rethinking the role of the state; 8. Fiscal rules and institutions; 9. Blueprint for public expenditure reduction; Part IV. Recent Countries' Experiences in Reforming the Government: 10. Recent reform experience; 11. Fiscal reform in the public debate; 12. The future of public spending.
' … a fascinating new book … Tanzi and Schuknecht argue, persuasively, that until the 1960s the rise in spending seems to have brought a big increase in public welfare, but that the extra spending mandated in the 1960s and 1970s, the age of greatest confidence in government, brought no further benefits.' Financial Times