Budgetary Trade-offs in Ethiopia, 1965 - 1993

Abstract

This paper surveys the pattern of Ethiopian public finance in the period 1965/66-1992/93 with special emphasis on the government expenditures. The trends of security, education, and health expenditures
as well as spending on economic services are examined. Then simple correlation, linear regression, and estimation of vulnerability indices and expenditure elasticities are used to test for the existence of budgetary trade-offs between the various expenditure categories. The results suggest that some trade-offs existed in the period studied, particularly the trade-off between security spending and human capital formation (using the spending on health and education as proxies). This crowding-out of human resource development by security spending was mare obvious during the Derg regime (1974/75 - 1990/91).