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ABSTRACT. Today most capitalist countries are experiencing continuous expansion of the public sector. Many studies have attempted to identify the factors that explain this public sector growth. The expansion of the public sector typically brings about the expansion of government expenditure. The purpose of this study is the identification of factors that are related to Korean government expenditure. Based on analysis of 1960-1990 Korean government expenditure, this study found that Korean government expenditures are closely related to GNP, the anticipated GNP growth rate by the Economic Planning Board (EPB), and the number of public servants.
INTRODUCTION
Most capitalist countries are faced with the continuous growth of the public sector, a phenomenon which accelerated after World War II. Korea is no exception. The growth of the public sector can be represented by the size of public expenditures.(') The expansion of the public sector produces public expenditure growth and thus requires increased resources. But because it is difficult for government to acquire the resources, most countries chronically record government budget deficits (International Monetary Fund, 1993). Furthermore the expansion of the public sector takes resources from the private sector and results in inefficiencies (Bails, 1979; Spann, 1977).
As public expenditure grows, several questions arise: What is the optimum size of the public sector? Is current government expenditure appropriate? Is government controllable? Answers to these questions cannot be determined by any one criterion (Musgrave, 1983). Many researchers contend that the public sector is too large, and they worry that the public sector is really uncontrollable in the sense that its activities and size are not decided by the purchasers of public goods but by other factors such as the political power of civilian government employees to expand their salaries and thus government expenditures (Buchanan & Tullock, 1977; Hahm, Kamlet & Mowery, 1995; Musgrave & Musgrave, 1989; Stiglitz, 1988).
In Korea, central government expenditures were 74 billion Won in 1960 and 74,534 billion Won in 1995 at current value. As indicated above, the increased growth in government and government expenditures has several implications which cause policy makers to want to control the growth. To do so, it is necessary to understand the changes in expenditure levels and to identify the factors related to these changes.
The purpose of this study...