Analysing government expenditure by function provides a detailed picture of how public funds are distributed across key areas such as health, education, defence, or social protection, therefore revealing the relative weight governments assign to different aspects of public service provision. It also sheds light on preferred delivery modes, indicating whether services are primarily provided through public institutions or in partnership with private actors. For policy makers, functional expenditure data is a vital tool for evaluating the alignment between resource allocation and strategic objectives, tracking changes in priorities over time, and comparing practices across countries. Ultimately, it offers a window into how governments translate their responsibilities into tangible public action and allocate resources to respond to societal needs and policy priorities.
Social protection, covering pensions and sickness, disability and unemployment benefits, accounted on average for the largest share of public spending across OECD countries in 2023 (13.4% of GDP), even higher (19.3% of GDP) in countries also part of the EU (Table 15.1). This level remained stable since 2019, with an average increase of 0.1 p.p. for both groups. However, within OECD countries, this share varies from 7.9% of GDP in 2023 in the United States to 25.7% in Finland, reflecting different institutional models. Between 2019 and 2023, the largest decrease in social protection spending occurred in Norway (-2.1 p.p.) explained by the GDP growth outpacing the growth of while the largest increase was observed in Korea (+1.8 p.p.) (Online Table J.10.1).
In 2023, healthcare, mainly covering hospital and patient services and medical products and equipment, accounted for the second largest share of public expenditure across the OECD (8.4% of GDP) with a 0.5 p.p. increase since 2019, partly due to the COVID-19 pandemic in 2020 and 2021. The lowest share is to be found in Switzerland (2.2% of GDP) and Hungary (4.0%), the highest in Colombia (10.3%) and the United States (10.1%), with differences in the level of spending across countries partially reflecting preferences for public or private health schemes.
At the opposite, spending on environmental protection represents the lowest share of public spending across all functions in 2023, accounting on average for 0.5% of GDP in OECD countries and 0.8% in OECD-EU member countries, a share that has remained stable since 2019. Greece (1.5% of GDP representing a 0.2 p.p. increase since 2019) has spent the most in this category in 2023. In 2023, OECD and EU member countries have allocated most of spending on environmental protection to waste management (0.36% of GDP), wastewater management (0.15%) and pollution abatement (0.14%), while protection of biodiversity only gathered 0.08% of GDP in public financing (Table 15.2).
Overall, while the allocation of public spending across functions has remained relatively stable between 2019 and 2023, spending on education, representing on average 4.9% of GDP in OECD countries in 2023, has seen the largest decrease (-0.2 p.p.). On the contrary, spending on general public services including the service of public debt has experienced the largest increase (+0.7 p.p.) and reached 6.0% of GDP in 2023.
