Human development and the optimal size of government An empirical study of the situation of Algeria during the period 1990-2017

Abstract

This paper investigates the relationship between Human development and the optimal size of government and determines the optimal level of government spending to maximize Human development, by using annual data for Algeria for the period of 1990-2017, and depending on methodology of Khan and Senhadji (2001), Study results indicate that, government expenditures have a threshold effect on growth rate of the Human development index, and it estimates the optimal level of government expenditure to be approximately 25.4%, we also find that the composition of public expenditure affects Human development, with the of three subcomponents exhibiting non-linear relationships withe growth rate of the Human development index.