ABSTRACT

This chapter outlines the general features of managing public sector revenue. Public sector spending grew in many countries in the world during the last two centuries. Around 1870, unweighted average public expenditures amounted to about 10" of gross domestic product (GDP) in the world. In relative terms to the GDP, the size of public spending was also magnified because of the drop of business activity since 1929 and during the Second World War. The four categories of public goods, private goods, common goods and toll goods suggest that the size of public spending depends on the selection of which goods a government decides to produce and in which kind of institutional arrangement. Public spending consists, essentially, of the use of money and other financial means of the government for the delivery of public policies and programmes. Public sector revenue is primarily collected for providing the financial means to implement public policies and programmes.