KEYNES VS. WAGNER: AN INVESTIGATION OF THE RELATIONSHIP BETWEEN ECONOMIC GROWTH AND SOCIAL SECTOR EXPENDITURE IN KARNATAKA

Abstract

The study examines the relationship between Economic Growth and Social Sector Expenditure. It focuses on Karnataka and provides insights into the impact of Social Sector Spending on the economy. The findings show that investments in the social sector contribute to Economic Growth. Past spending on social sectors can predict current Economic Growth patterns. However, Economic Growth does not necessarily lead to increased social sector spending. These findings support the Keynesian hypothesis on government spending and Economic Growth. In contrast, the results did not offer substantial support for Wagner's hypothesis, which suggests that as economy grows, there will be a proportionate increase in Social Sector Spending. In conclusion, the state of Karnataka provides a compelling narrative on the power of social investments in shaping its economic trajectory. As policymakers and stakeholders grapple with decisions on public spending, this research underlines the importance of viewing Social Sector Expenditures not just as costs, but as potential drivers of economic prosperity.