effects of government spending on productivity

Government spending can have a positive or negative impact on productivity. A positive impact can result if government spending increases the availability of resources needed to produce goods and services, bolster infrastructure for businesses, or provide businesses with tax incentives to invest in their operations. On the other hand, government spending can have a negative effect on productivity if it crowds out the private sector or fails to adequately invest in the needed resources and infrastructure for production. Additionally, if government spending increases the size of government bureaucracy and bureaucracy-related regulations, it can reduce an economy's ability to produce goods and services efficiently.