Higher government spending per GDP unit linked to lower economic output per person
Comparing General government total expenditure (current LCU), per unit of GDP with Gross value added at basic prices (GVA) (current US$), per capita across 189 countries, 2011–2025.
- Rank correlation
- -0.61
- Holding size constant
- -0.48
- Countries compared
- 189
- Period
- 2011–2025
What might link these
Countries with larger government sectors relative to GDP may have lower per-capita GVA if public spending crowds out private activity or reflects economic inefficiencies. A careful reader should note that correlation does not imply causation—reverse causality or omitted variables (e.g., institutional quality) could drive this pattern.
Why this is not proof of anything
This is a correlation across countries, not an experiment. It cannot show that either indicator causes the other, and both may simply follow a third thing. The relationship could be distorted by differences in how LCU and US$ are converted or by unmeasured factors like tax policy or sectoral composition.
The second figure above repeats the measurement with national population and income held constant. It is the more conservative number: a relationship that largely disappears there was mostly telling you that larger, richer countries have more of most things.
How this was measured
Both indicators were ranked across every country reporting each, and the two rankings compared — ranks rather than raw values, because a handful of very large countries can otherwise manufacture a relationship on their own. The calculation is arithmetic over figures already published on this site; the commentary above is drafted from the two indicator names and the resulting coefficients.