Public Expenditure, Public Sector Size and Growth: The European Union Marked Structural Differences

The scope of this paper is to examine the evolution of public expenditure and its structure per individual European Union (EU) member state, as well as, its potential correlation with the levels of economic prosperity (change of GDP) during the 1996-2007 period. The statistical data used for comparison have been taken from the European Statistical Service (Eurostat). Results showed that the majority of EU member states have a medium-sized public sector, while, irrespective of that size, all countries reduced the size of their public sectors. The average rate of growth in countries with large public sectors ranged between 1.4 and 3%. In countries with medium-sized public sectors the rate of growth ranged from 1.5 to 4.6% while in countries with small public sectors it ranged between 3 to 7%.