Table 1. Summary of Selected Empirical Studies: Public Expenditure and Poverty (continued)

|Country(ies)|Period|Unit of<br>Analysis|Author|Analytical<br>Method|Expenditure<br>Components|Summary of<br>Empirical Findings|
|---|---|---|---|---|---|---|
|Thailand|1986, 1990,<br>1994|Households|Warr, 2003|Partial equilibrium<br>analysis|Education, health, agriculture, and<br>transportation.|Increased spending on education,<br>health, and agriculture reduces poverty<br>while higher share of spending on<br>transportation increases poverty.|
|Uganda|1992, 1995,<br>1999|District|Fan, Zhang, and Rao,<br>2004|<br>Regression analysis<br>(system of equations)|Public investments in rural areas<br>(Agricultural research and extension,<br>low-grade and high-grade roads,<br>education, and health)|Research has the largest poverty and<br>rural productivity impact. Impact of<br>low-grade road larger than high-grade<br>road. Spening in poor regions<br>contribute the most to poverty<br>reduction.|
|Vietnam|1993-2000|Province|Fan, Huong, and<br>Long, 2003|Regression analysis<br>(system of equations)|Public investments in rural areas<br>(Agricultural research, roads,<br>irrigation, education, electricity,<br>telephone)|Research has the largest poverty and<br>productivity impact.|
|Zambia|1995|Country|Jung and Thorbecke,<br>2003|CGE|Education and investment|Well-targeted education expenditures<br>can be effective for poverty<br>alleviation. To maximize benefits,<br>education spending needs to be<br>complemented by sufficient public<br>investment.|

Sources: As indicated.

To conclude the review of the empirical literature, we mention additional strands of work that investigate other dimensions of the public spending and poverty link such as complementarities in public spending and, combined benefit incidence.<sup>28</sup> _Complementarities_ . Complementarities between government interventions may come in two general forms: some interventions are enhanced by the presence of other interventions; some interventions are mitigated by the presence of other interventions. First, the benefits of higher expenditure on a particular sector may not be fully realized unless expenditure on other sectors is increased. For example, Fay and others (2003) find that better access to basic infrastructure services (water and sanitation) has an important role in improving child health outcomes. Similarly, van de Walle (1995) suggests that education investment may enhance the marginal impact of irrigation projects (1995). A related point is the necessity of sufficient human capital to realize the benefits of infrastructure investments. For example, the ADB (2002) finds that the ability of the poor to make significant economic use of roads depends on their asset base, their skills, etc.<sup>29</sup> .

28 Admittedly, there is yet further work that investigates other important facets of the link between public expenditure and poverty. As it is not the objective of this paper to give a complete account of all this work we are not discussing this further. Nonetheless, there is an abundant literature on the role of governance on the effectiveness of public expenditure.

29 There are many other examples of this type of complementary documented in the literature. For example, Deininger and Okidi (2003) use micro-level survey and panel-data evidence from Uganda spanning 1992-2000 and find that the benefits of education and health care for growth and poverty reduction depend on complementary investments in electricity and other infrastructure, and reductions in civil strife.

17