The world is in the midst of a seemingly unending sovereign debt crisis with many nations either unwilling or unable to control government spending. One measure that investors might use to track these expenditures on a global basis is government spending expressed as a percentage of GDP.

The top five major countries with the highest government spending levels as a percentage of GDP are spread across the globe, and include some of the wealthiest nations in Europe, along with one of the world's poorest countries.

According to the Heritage Foundation, Zimbabwe is the most profligate spender under this criterion, with government expenditures totaling 98% of GDP in Zimbabwe in the latest year that data was available. This includes consumption and transfer payments, as well as direct government spending.

This doesn't necessarily mean that government spending is increasing on an absolute basis in Zimbabwe, as the economy in that country contracted for most of the last decade, before finally rising at a real growth rate of 6% in 2009 and 9% in 2010.

Any investor that is thinking of putting some money directly to work in Zimbabwe should probably reconsider because that country has little regard for property rights, price controls on major parts of the economy as well as restrictions on foreign exchange transactions and capital flows.

Investors with a high risk tolerance can look to the Zimbabwe Stock Exchange, which allows foreigners to buy shares in companies based here. Liquidity is an issue here, as total share volume for the entire Zimbabwe Stock Exchange during a recent trading day was approximately 10 million shares. (For related reading, see The Birth Of Stock Exchanges.)

It probably comes as no surprise that Cuba is second on the list due to that county's reputation as one of the few remaining communist states. Cuba's government spending is at 78% GDP, a level that has been fairly stable over the last decade.

Although Cuba has made some efforts at reform through allowing limited private ownership of businesses, Cuba essentially has a state run economy and employs more than 80% of the labor force.

Investors can go into the over the counter market and buy shares of Cuban and other companies that operated there prior to the 1959 assumption of power by Fidel Castro. These companies all suffered the expropriation of assets in Cuba, leaving shareholders only the very, very slim hope that some value may one day be realized if the government in Cuba changes and offers compensation for these assets.

European Countries
Although Europe is at the center of the sovereign debt crisis, with Portugal, Italy, Greece and Spain often mentioned as having the greatest debt problems, these four countries aren't even the biggest spenders on that continent. That honor belongs to Denmark, France and Sweden, where government spending levels are at approximately 52% of GDP.

All three countries have seen this percentage increase since 2005, as government spending on fiscal stimulus and social protection surged to help buffer the effects of the recession. This is the pattern in most members of the European Union, where the average spending as a percentage of GDP increased from 46.8% in 2005 to 50.3% in 2010. (For additional reading, see Is It Eurobonds Or Bust For The Eurozone?)

Bad Investments?
Although Denmark, France and Sweden are at the top of the list, this does not necessarily mean that investors should avoid putting money to work here, as all three countries have AAA sovereign debt ratings from Standard and Poor's and the other major ratings agencies.

The lack of any relationship between investment quality and government spending as a percentage of GDP is demonstrated by examining Bulgaria and Romania. These two countries spend the least amount as a percentage of GDP, and yet have BBB sovereign debt ratings.

United States
Although the United States has suffered from a recent downgrade of its sovereign debt rating, government spending as a percentage of GDP is in the middle of the pack. The White House reports that total government expenditures as percentage of GDP totaled 35% in fiscal 2010. This includes both Federal and State spending and off budget items as well. The Heritage Foundation, which calculates the spending level differently than the White House, puts the percentage at 38.9%.

The Bottom Line
Government spending as a percentage of GDP is a simple metric that some may rely on to keep up on government spending across the globe. One weakness of this measure is that it considers only the expense side and ignores government revenues generated through taxation and other methods. Use this in conjunction with other statistics to get a true handle on government spending. (For related reading, see What Is Fiscal Policy?)