Financial Crises and Social Spending : The Impact of the 2008-2009 Crisis

Abstract

This paper examines the impacts of the
 2008-2009 economic crisis on social spending, drawing on
 evidence at the global, national, and household levels, to
 provide a sense of the nature and the effects of the
 worldwide downturn on spending in the social sectors. It
 summarizes existing empirical evidence on the relationship
 between crises, or other serious dislocations on education,
 health, HIV/AIDS, and nutrition as background to the
 analysis of growth and social spending. The paper analyzes
 the relationship between GDP growth, growth in education and
 health spending, and projects expenditure responses to 2012,
 to illustrate how expected changes in future economic growth
 are likely to affect both absolute spending and growth in
 social expenditures. It provides an analysis of the effects
 on HIV/AIDS spending, a relatively new funding category and
 therefore outside the purview of the econometric analysis.
 It examines the responsiveness of Overseas Development
 Assistance (ODA) to financial crises in terms of subsequent
 allocations from the developed world, and the impacts on ODA
 spending for education and health in developing and
 transition countries. The paper concludes by citing existing
 evidence on regional impacts of the crisis on public
 spending, and the effects on household budgets in Eastern
 Europe and Central Asia, the region hardest hit by the
 current crisis.