Structure of general government expenditures by function (COFOG)

Governments’ expenditures by function reveal how much governments spend on key areas, such as education, health, defence, social protection or public order and safety. These different functions aggregate expenditures according to predefined categories, enabling informative comparisons of national priorities across governments.

In 2015, social protection represented the largest share of government expenditure across OECD countries, averaging 32.6%, ranging from 44.9% in Finland to 19.4% in Korea. Pensions reached on average more than half of all social protection expenditures in 2015 (see the indicator on structure of expenditures of social protection).

Health care represented the second highest share reaching 18.7% of government expenditures on average for the same year, ranging from 24.2% in the United States to 6.5% in Switzerland. The relative low level of government health spending in Switzerland resulted by the system of private coverage of health risks in this country.

General public services –which include debt servicing– accounted for 13.2% of government expenditure, while education represented 12.6%. Defence, together with public order and safety, represented an average 9.4% of government expenditure among OECD countries for 2015; defence spending was the largest as a proportion in Israel (14.9%), the United States (8.8%) and Korea (7.8%), while expenditures on public order and safety were the largest in Latvia and the United States (both 5.4%).

Economic affairs in 2015, reached 9.3% of public spending on average across OECD countries, from 17.3% in Hungary to 5.9% in Israel. Within economic affairs, transportation represents on average the highest share with 47.6% of these expenditures, followed by general economic, commercial and labour affairs with 22%.

The share of government expenditures is relatively low on the other functions such as in recreation, culture and religion which averaged 1.5% in 2015, ranging from 7.5% in Iceland to 0.7% in the United States. Environmental protection averaged 1.3% of government expenditure, the highest of which was 3.2% in the Netherlands, while housing and community amenities represented, on average, 1.4% of government spending: from 2.6% in Korea and Latvia, to 0.1% in Israel.

Medium- or long-term comparisons of government expenditures by function show, to a certain extent, re-compositions among expenditures. Across OECD countries, changes of expenditures have occurred between 2007 and 2015, as the shares of spending in general public services, defence, public order and safety, economic affairs, education, and recreation, culture and religion have decreased, while the shares of health and social protection have increased. The largest increase was in social protection (+2.6 p.p.), and the largest decrease occurred in general public services (-1.2 p.p.). Among the OECD countries, the largest changes in social protection involved increases in Latvia (7.6 p.p.) and Spain (6.2 p.p.), while the largest decreases occurred in general public services for Greece (-6.9 p.p.).

Among OECD accession countries, Costa Rica had the highest proportion of expenditures in both education (23.3%) and health care (19.3%), while Lithuania had the highest proportion in social protection (31.7%). Colombia and Costa Rica spent a larger proportion than the average OECD country in public order and safety, with 6.8% and 8% respectively, while the later has no defence expenditure, like Iceland, as they abolished their armed forces in 1948.