Fiscal Policy and Economic Growth: A Comparative Study of Fiscal Regimes in Developing and Developed Countries

Sérgio Jesus Teixeira

doi:10.56201/ijefm.v10.no10.2025.pg71.79

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Fiscal Policy and Economic Growth: A Comparative Study of Fiscal Regimes in Developing and Developed Countries

Sérgio Jesus Teixeira

Abstract

This article analyzes the relationship between fiscal policy and economic growth from a comparative perspective between developed (OECD) and developing countries, focusing on structural differences in tax regimes, public spending composition, and fiscal sustainability. A quantitative approach is adopted, using macroeconomic data for the period 2000–2023 from the World Bank, IMF, and OECD, applying multiple regression and correlation analysis. The objective is to evaluate how fiscal policy variables — particularly tax burden, revenue composition, public expenditure, and budget balance — influence real GDP per capita growth. Preliminary results indicate that in developed countries, fiscal policy acts as a stabilizing tool, while in developing economies, fiscal constraints and macroeconomic volatility limit its effectiveness in promoting growth. Furthermore, institutional quality and expenditure efficiency appear more critical for growth than the absolute tax level. It concludes that effective fiscal policy relies less on the magnitude of taxation and more on composition, predictability, and fiscal credibility. The study contributes to ongoing debates on the role of the State and fiscal discipline in sustainable growth across different development stages.

Keywords

fiscal policy; economic growth; public expenditure; taxation; developing countries;

References

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Fiscal Policy and Economic Growth: A Comparative Study of Fiscal Regimes in Developing and Developed Countries

Abstract

Keywords

References

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