Exploring how public welfare spending shapes global economic interconnections among G7 nations: empirical evidence from panel-corrected standard errors (PCSE) and feasible generalised least squares (FGLS) estimation approaches

Abstract This study investigates the impact of public welfare spending on global economic interconnections among the Group of Seven nations from 1980 to 2021. Using panel-corrected standard errors and feasible generalized least squares estimation, the results show that welfare expenditure contributes 37.55% to global economic integration, largely through Foreign Direct Investment. Unemployment spending negatively affects interconnectedness, while pension spending has a greater positive influence. Family benefits have minimal impact, whereas social expenditure enhances global connectivity. The findings suggest that targeted welfare spending can strengthen global economic linkages.