Austerity vs. growth: It's more about spending wisely than spending more
Source: Courtesy of INSEAD Knowledge , Author: Amine Ouazad
Posted: Wed May 16, 2012 5:06 pm

INTERNATIONAL. François Hollande implicitly assumes that austerity and growth are incompatible. Yet, a common misunderstanding nowadays is that austerity programs and high quality public services are inconsistent.

But countries spending the most on healthcare and education — the latter being essential to the competitiveness of European nations in international trade --  are not necessarily the ones with the best healthcare and the best schools. France ranks 11th in spending on education as a percent of GDP while Germany ranks 29th.

However, German students rank much higher than French students in reading, mathematics, and science in the latest international OECD assessments.

Also, Germany has a high performing apprenticeship scheme in secondary schools that contributes to the strength of German exports. In a word, it is more about spending wisely than spending more.

Note: Amine Ouazad is INSEAD Assistant Professor of Economics and Political Science.

This article is republished courtesy of INSEAD Knowledge

Copyright INSEAD 2012

RELATED ARTICLES

French elections analysis: A matter of different emphasis and degree

French elections analysis: Let's hope Hollande was lying to get elected

Austerity vs. Growth - A false choice, says Christine Lagarde

 

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: April 22, 2014
UAE. "Adapt to Survive", a global study by PwC, commissioned by LinkedIn, reveals the economic impact of not having the right people in the right jobs.
date:Posted: April 22, 2014
KUWAIT. For much of the past decade, international companies operating in the major projects sector have found Kuwait a challenging market in which to do business. However, there are good reasons to believe this year will be different.
date:Posted: April 22, 2014
INTERNATIONAL. The infrastructure bottlenecks need to be resolved urgently if the U.S as a whole is set to reap the benefits of the shale boom in the form of cheap and widely available gas.
INTERNATIONAL. Oman's plan to build a US$1 billion natural-gas pipeline from Iran is the latest sign that Saudi Arabia is failing to bind its smaller Gulf neighbours into a tighter bloc united in hostility to the Islamic Republic.
dhgate