chapter  6
23 Pages

SOCIAL IMBALANCE IN PUBLIC EXPENDITURE

Health, education and defence

The discussion now shifts from unbalanced development outcomes brought about by government misallocation of physical capital investment to human capital, that is, the analysis of causes and results of inadequate investment in people, the most valuable asset in a civil society. My guiding proposition is that regardless of affluence levels, the process of development requires a trained, healthy and adequately nourished workforce. We need to keep in mind that both public and private consumption/expenditure and the complementarities between investment in physical capital and investment in human capital coalesce in the realization of the principal objective of development: raising the standard of living in order to eradicate hunger and poverty. Besides being a provider of social services, including government administration and defence, the state’s economic role ranges from being a direct producer and regulator of the economy to being a distributor of income. This chapter concentrates on the first role, namely the provision of resources for health (including sanitation) and primary education, and examines their order of priority relative to military spending.