Many bureaucrats believe that the Development model (by Musgrave and Rostow) is easier to understand than Wagner’s Law/model in explaining the theory of public expenditure. By comparing and contrasting this two of the expenditure growth theories, do you agree with motion? Comparing and Contrasting Musgrave and Rostow’s Development Model and Wagner’s Law/Model for Explaining the Theory of Public Expenditure

Comparing and Contrasting Musgrave and Rostow’s Development Model and Wagner’s Law/Model for Explaining the Theory of Public Expenditure

The Development Model, proposed by Musgrave and Rostow in 1959, is a theory of public expenditure that suggests that economic growth is an outcome of the rational allocation of resources. This theory is based on the premise that governments should be able to use public expenditure to stimulate economic development in order to achieve desired outcomes. The Model assumes that governments should be able to identify and take advantage of opportunities that exist in the economy, such as investments in infrastructure, education and health care, in order to create an environment of economic development. In contrast, Wagner’s Law, proposed by Adolph Wagner in 1883 and later expanded by Abraham Wagner in 1907, is a theory of public expenditure that suggests that public expenditure increases as a result of economic growth. This theory is based on the premise that as economic growth occurs, the demand for public goods and services increases, resulting in an increase in public expenditure. The theory further suggests that increased public expenditure is necessary to maintain economic growth and development. After comparing and contrasting Musgrave and Rostow’s Development Model and Wagner’s Law/Model for explaining the theory of public expenditure, it is evident that both theories have their merits. The Development Model is. Cont…