International Evidence of Strengthening Taxes and Spending for Sustainable Development

We trace the linkages between fiscal episodes and sustainable development in 72 advanced and emerging and developing economies. The findings suggest that fiscal expansions are positively associated with economic growth, which, in turn, is positively linked with sustainable development. On the other hand, the association between fiscal consolidation and both economic growth and sustainable development is less clear. More tax revenues and expenditures, together with better governance, jointly help explain the association between economic growth and sustainable development. High-income economies as well as high-tax revenue and manufacture-exporting economies made significant progress in reducing disease-linked mortality and strengthening environment protection as they grew. Meanwhile, emerging and developing economies, along with low-tax revenue and commodity-exporting economies, made notable progress in poverty reduction, access to basic sanitation services, and clean cooking fuels and technologies. On average, the sampled economies performed persistently better on primary goals such as sanitation and clean fuels and technologies. More recently, they made progress on mortality reduction and environmental protection