The commonly hypothesized influence of government spending and investment expenditure on economic development was tested over the period 1950-1980 for a sample of 63 countries, 21 industrial and 42 developing, using constant international prices. Causality tests revealed a uniform pattern of behaviour in both industrial and developing countries, and found no statistical significance for either government or investment spending. This finding appears to be indicative of the low-productivity government services and the dominance of consumption in government spending, whereas from the point of view of investment it suggests that capital alone cannot bring about economic development.