|29th IBIMA Conference
3 - 4 May 2017
The Impact of Public Social Expenditures on Economic Development
Tatyana Tkacheva, Lubov Afanasjeva and Lubov Goncharenko
In the present context, active participation of the state in social regulation is considered as an effective tool for overcoming financial, political and social crises. Current studies show the conceptual crisis of the theory of "welfare state". Studying the categories of "social standards", "standards of living" or "minimum standards" and their ensuring and regulation by means of financial and fiscal mechanisms of the state is of particular relevance nowadays. Active social support for the population adversely affects the efficiency of the economy, which results in increased unemployment. As some theoretical and practical studies demonstrate, the economic behaviour of the working population is determined solely by full rationality. As a result, the ability and desire to earn is lost, and individuals begin to rely on the state, which leads to dependency. The article shows that outrunning growth of government payments for social needs has a negative impact on overall economic performance, contributing to the growth of the budget deficit, inflation, foreign borrowings and public debt. The authors have shown that once the social costs are beginning to outpace the GDP growth rate, then there is a decrease in economy development rates. In the present paper, there has been given the dynamics of unemployment figures and public spending on social benefits which are closely correlated. There has been analyzed the dependence of GDP of the EU countries upon public expenditure on social benefits and unemployment rate for the period of 2005 - 2015. The obtained multiple regression equation makes it possible to reasonably make strategic decisions in the field of human capital development as public expenditures on social support of the population, education, healthcare are considered as a priority for long-term economic security of countries.