Public expenditure  may either be recurrent expenditure or development expenditure.

Recurrent  government expenditure refers to the day today government expenditure on short term requirements. It may also refer to government expenditure to maintain  existing structures like social services, defence, cabinet expenses etc.

Development  or capital  government expenditure refers to the  expenditure on long term investment projects like  industrialisation, agricultural projects, education etc.

Public expenditure is important especially in LDCs because of the following reasons.

Public expenditure is important at facilitate the establishment of core heavy industries for which the private sector may lack adequate capital.

In under developed countries, private enterprises is reluctant to invest  in risky channels and where returns  on capital are  not quick.  Under such cases, rapid economic development is only possible through public expenditure.

Public expenditure is necessary to foster a fast pace of economic growth and ensure steady employment to the public.

Public expenditure plays the role of raising peoples' incomes as a means of improving on their standards of living.

The role of public expenditure economic development  lies in the  provision of social  and economic  overheads like roads, railways, power supply etc. which improve on the  productive capacity of the economy.

Public expenditure helps  in stimulating private enterprise through the establishment of state  owned  financial and banking institutions to provide cheap credit.

Public expenditure also assists and encourages  both the agricultural  and industrial sectors  by means of grants  subsides, tax rebates etc.

Public expenditure is necessary  to reduce  inequalities in  income and wealth. Thus expenditure  on education earth and  medical facilities  helps in human capital formation which guarantees  people access to job  opportunities and eventual reduction  in inequalities in the  longrun.

Public expenditure helps in improving the  allocation of resources towards desired areas e.g.  it may  nationalize banks and public  utilities in order to provide cheap and more efficient facilities to the people.

Public expenditure is necessary in ensuring regional balanced growth  and development  in the economy  as it  caters for all areas as opposed to the private sector where economic activities  are concentrated  in particular places for profit  motive.