| Abstract
| - The public sector in developing countries has traditionally played an important role in the financing of educational and health services. This review finds, however, that the share of public subsidies in these two sectors is not progressive, that is, proportionately higher for individuals in the lower socioeconomic groups. This distribution persists despite explicit policies of universal free provision in many countries. The article argues that the extent and pattern of public spending contribute to underinvestment and to a misallocation of scarce resources within the education and health sectors.
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