July 03, 2007	Tuesday	Jamadi-us-Sani 17, 1428

KARACHI, July 2: Well-run governments get better results out of their budget resources, according to Fiscal Policy and Economic Growth: Lessons for Eastern Europe and Central Asia, released in Brussels on Monday by the World Bank.

The study draws on quantitative analysis and case studies to confirm that more productive public spending, lower fiscal deficits and greater reliance on non-distorting taxes can spur economic growth.

The report reviews trends in public spending and taxation in Eastern Europe, Turkey, and Central Asia since the 1990s and how they compare to trends in high-growth countries elsewhere in the world.

Middle-income countries in Eastern Europe typically have bigger governments than comparator countries in Asia or Latin America because of large social transfers.

Primary public spending in Croatia is more than double the size of that in Thailand, and the eight Eastern European countries that joined the EU in 2004 spend on average three times as much on social transfers as Korea. The lower-income countries in ECA have smaller governments, closer in size to the high-growth comparators.