The Public Sector

Since the early 1980s, most OECD countries have embarked on medium-term strategies to restore greater balance to the public finances and to wind back government intervention in the economy. The attached paper examines the progress so far. It also reviews and evaluates some of the changes to public sector management practices which were implemented in the 1980s and assesses some of the pressures on the public sector which are likely to arise in the 1990s. Most OECD governments appear to have made significant headway in budgetary consolidation, particularly in the second half of the last decade, and public expenditure as a share of GDP has stabilised for the area as a whole, once allowance is made for cyclical effects. There has also been some measure of success in reducing economic regulation in a number of sectors. Nonetheless, governments are likely to face increased spending pressures in the 1990s, partly reflecting catch-up following expenditure restraint in the 1980s. Improving ...