PUBLIC EXPENDITURE IN THE REGIONAL ECONOMY OF NORTHERN IRELAND: HAS THE GROWTH OF THE 1970s BEEN SUSTAINED?

In recent decades political and economic interest has focused on a phenomenon known as the ‘growth of government’, a euphemism for rising public expenditure. Studies that have focused on the process are broadly classified into three distinct areas those that highlight the phenomenon (Saunders and Klau, 1985); those that identify the contributory factors (Henrekson, 1990) and those that embrace both approaches (Lybeck and Henrekson, 1988; Gemmell, 1993). Whilst such studies highlight the differing rates of growth in public expenditure across the industrialised nations of the world, there are a number of common strands. For example, the 1950s and 1960s were generally viewed as a period of stable growth, whereas in the 1970s, especially since the first oil crises of 1973, there was dramatic growth due to rising levels of unemployment and expansionary fiscal policies. However, the 1980s and 1990s represent a sea change in the pattern of public expenditure growth. During this period the consensus has been that the size of the public sector has exceeded the willingness of the voter-tax-payer to finance it. As a result, there is greater pressure on fiscal budgets and policies have been introduced to reduce the role of the public sector generally and public expenditure in particular.