Abstract:

One of the primary purposes of governments is to sustain human development and economic growth. In this context, the goal of the study is to test the impact of taxes, government expenditures, income and infrastructure (electricity consumption) on the human development empirically in the period of 1998-2007 for 14 OECD countries. Panel unit root, panel cointegration, panel FMOLS, panel DOLS and panel vector error correction based causality methods have been used in the study. According to panel FMOLS results, while taxes have a negative impact on human development, government expenditures and income have a positive impact on it. The coefficient of the electricity consumption is not statistically significant. We also find that government expenditures and electricity consumption have a positive effect on human development according to panel DOLS results, however the coefficients of income and taxes are not statistically significant. Causality test results show that in the long term, there are causality relationships from taxes, government expenditures, electricity consumption and income to human development and from taxes, government expenditures, human development and electricity consumption to income. As a result of these findings we evaluate the government policies that have been implemented in countries that have high human development level and make some policy suggestions in the conclusion section.

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