Overhead – Countries compete among themselves to take space among developed countries in various fields and depend on public expenditures that provide them with an opportunity for development and rehabilitation. But are all expenditures made by the state aimed at increasing the level of the state or competition in certain areas, or are there other expenditures? Classical economists did not give much importance to overhead in the past. The activity of governments throughout the nineteenth century was small due to very restrictive government activities, and in contemporary times, due to the increase in government spending and challenges in countries, the interest in and study of public spending has increased significantly, and to answer the previous question we need to understand And the study of public expenditures: what are public expenditures? And what are their types? What are its general effects?
What are the overheads?
Public expenditures are defined as all monetary amounts paid by local authorities, whether government, municipalities, or state governments if there are states in the country, in order to meet the needs of individuals in the state and serve its interests, and spending is either within the state itself, such as spending on education, health, social security, and infrastructure, or external spending for other countries, such as grants, gifts, and loans, in order to serve the political interests of the state. Expenditure is public only if it is spent by government institutions or persons with authority in the government in the name of the government, and it excludes personal spending paid by those in authority voluntarily from government spending.
What are the types of overhead?
There are a large number of classifications of overhead based on the result achieved by these expenditures, and all these classifications are similar in content, even if they differ in name. The following is a statement of the two most important classifications, according to the author’s point of view:
Classification by benefits
overhead is classified on the basis of the benefits granted to different groups within the same society and is divided into:
1- Common benefits for all
These are the benefits that all members of this state obtain regardless of social class, financial status, religion, or race, such as the following:
Expenditure on the state administration that organizes the lives of all residents.
Spending on health care.
Expenditure on the medical sector is needed to develop this sector in the country so that all members of society will benefit from this spending.
Spending on roads and infrastructure that everyone has the right to use, such as public parks, gardens, and parking lots.
2- Special benefits for some
It includes all expenditures that benefit one group in society over another, such as:
Spending on the unemployed serves a specific category of people who do not work for specific reasons.
Expenditure on the old-age pension is limited, as it is paid to specific age groups and not to other groups.
Hugh Dalton’s Public Expenditure Ranking
Hugh Dalton classified overhead as:
1- Expenditures on political executives
It includes all the expenses incurred by the state on behalf of its officials, such as the following:
wage expenses.
Travel expenses and travel allowances.
Mobility expenses.
Special privileges on customs duties.
Fuel savings expenses.
Air ticket expenses, etc.
2. Administrative Expenses
They are the sums spent on managing the state and maintaining public order in it, such as the following expenditures:
Expenses paid for wages.
Allowance expenses.
Expenses for maintenance of government departments.
Expenses paid for incentives and others.
3- Security expenses
There are many types, as follows:
defense sector expenditures.
Army armament expenditures.
Military research expenditures.
Payroll expenses for military personnel
Expenditures for the construction of military equipment factories.
Internal security expenditures in order to preserve the safety of citizens as well as expenditures on civil defense
4- Expenses of administration of justice
It is the expenditure that is paid to the judiciary in the state on the courts, judges, and prosecutors, such as:
Expenses of erecting buildings for the judiciary.
wage expenses.
Allowance expenses.
maintenance expenses.
Water, electricity, and any other fees
5- Development expenditures
They are the expenditures that are paid for a main goal, which is to achieve the development of the state, such as:
Expenditures for building and developing state infrastructure, such as dams, roads, ports, and government facilities.
Investment expenditures such as establishing government investment projects with the aim of making profits, for example, or with the aim of employing the unemployed, reducing unemployment rates, and increasing consumption subsidies.
6- Social Expenditures
These are expenses that are social in nature, such as:
Social Security expenses.
Expenses of health seminars.
Conference and community education expenses.
Expenditures for the construction of cultural centers.
Expenditures for building and developing the education, culture, theaters, and arts sectors
7- General Debt Fee
It includes the payment of state debts and the benefits arising from these debts, whether they are external debts from international organizations or other countries or internal debts.
What are the overhead objectives?
overhead have a set of objectives that they seek to achieve, as follows:
Preserving the continuity of the state and ensuring the law and order in it.
Maintaining economic stability and promoting economic development by adopting expansionary or contractionary spending policies according to the current state of the country’s economy.
Construction of investment projects to combat economic ills such as poverty, unemployment, and others.
Obtaining an advanced level in all fields among the advanced countries, such as the military, science, medicine, and others.
Meeting political interests through foreign spending in other countries such as grants, loans, and participation in foreign international strategic projects for political purposes
Establishing and developing infrastructure in a way that keeps pace with the increase in population numbers, such as roads, transport networks, buses, trains, airports, and parks, in a way that prevents problems that obstruct traffic and keeps pace with the development in other competing or neighboring countries.
Why is overhead important?
It is certain that overhead carry a lot of importance and are paid for specific and clear objectives of economic development and maintaining and enhancing economic stability. The following is an explanation of their importance:
Promoting rapid economic development resulting from pumping money into the markets through direct government support for individuals or subsidizing goods and services to create a state of rapid demand in order to prevent an economic depression when the recession continues for a period of time
Develop trade by supporting local commodities to reduce their price and increase demand for them.
Promoting rural development by building the necessary infrastructure for the countryside and carrying out investment projects that benefit the rural population
Developing the agricultural and industrial sectors by supporting industries and agriculture with investment loans, grants, exemptions on exports, or reducing taxes on investors in these sectors
Contribute to the upgrading and construction of the state and the modernization of its infrastructure by building ports, airports, streets, tunnels, and others.
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