2003-06 increase. Indeed, this rise was greater (by about one
percent of GDP) in the LOC than in the NO-LOC ones (Table 6).
A factor in the public expenditure rise was the increase in
tax/GDP ratios (see above). Changes in the structure of public
expenditure also played a role. For instance, the debt cancellation
enjoyed by HIPC countries permitted reallocating to social
activities monies used to service the foreign debt^53 , while ODA-
recipients increased rapidly their social expenditure, possibly due
to growing conditionality for achieving the MDGs.
T a b l e 5. A v e r a g e p u b l i c e x p e n d i t u r e / G D P i n L O C v e r s u s N O - L O C
c o u n t r ie s ( 1 8 c o u n t r i e s )
Source. Authors’ elaboration on the basis of the ECLAC database Badenso. Notes: the data refer
to the 18 countries analyzed in this study, including Bolivia (using national data) omitted in
similar studies by CEPAL (2005 and 2007a).
The rise in public social expenditure likely generated positive
redistributive effects. Analysis of studies on the incidence of public
social expenditure by income quintile for 18 countries over 1997-
2003 (CEPAL 2007, Gasparini et al 2007) suggests that: all
components of public social expenditure (including social
security) are less concentrated than private incomes (Table 7);
expenditures on primary education and social assistance are
strongly progressive, those on secondary education and healthcare
are mildly progressive or proportional (depending, in the case of
health, on the approach to its financing), and those on tertiary
education are as concentrated as the income distribution. In turn,
social security outlays (pensions and unemployment benefit) are a
bit less concentrated than those of private income, as they focus
(^53) Since 1996-7, Bolivia, Honduras and Nicaragua benefitted from debt
cancellations of 5, 6 and 2 percent of their GDP.