The nexus between size and efficacy of government: evidence from OPEC
Abstract. From classic to modern economic theories, the scope and size of government in economy have been always main topics for economists. The governments have played different roles in a historical context. Provision of public goods is a generally accepted task for all governments. The supply of public goods requires efficient allocation and management of scarce resources. Government efficacy stems from good governance and proper planning and policy-making. This paper aims to bridge from government size to government efficacy the Organization of the Petroleum Exporting Countries (OPEC). To this end, a panel data in the model is estimated during 2002-2015 by using some control variables. Findings indicate a negative relationship between government size and efficacy. In addition, oil rents affect government efficacy negatively. The trade openness result in efficient government. Finally, economic growth has positive effect on result in government effectiveness. According to findings, minimization of government size, injection of oil revenues into Sovereign National Funds (SNFs), adoption of open door policies, and targeting sustainable economic growth give rise to an efficient government.
Keywords. Government size, Government effectiveness, Trade openness, Oil rents, OPEC.JEL. F41, F53, H11, P48.
Afonso, A., & St. Aubyn, M. (2005). Non-parametric approaches to education and health efficiency in OECD countries. Journal of Applied Economics, 8(2), 227-246.
Alavirad, A. (2003). The effect of inflation on government revenue and expenditure: the case of the Islamic Republic of Iran. OPEC Energy Review, 27(4), 331-341. doi. 10.1111/j.0277-0180.2003.00074.x
Anthonsen, M., Löfgren, Å., Nilsson, K., & Westerlund, J. (2012). Effects of rent dependency on quality of government. Economics of Governance, 13(2), 145-168. doi. 10.1007/s10101-011-0105-3
Atkinson, A.B., & Stiglitz, J. E. (2015). Lectures on Public Economics. Princeton University Press.
Auty, R.M. (2007). Natural resources, capital accumulation and the resource curse. Ecological economics, 61(4), 627-634. doi. 10.1016/j.ecolecon.2006.09.006
Boadway, R., & Flatters, F. (1982). Efficiency and equalization payments in a federal system of government: A synthesis and extension of recent results. Canadian Journal of Economics, 613-633. doi. 10.2307/134918
Boschini, A.D., Pettersson, J., & Roine, J. (2007). Resource curse or not: A question of appropriability. The Scandinavian Journal of Economics, 109(3), 593-617. doi. 10.1111/j.1467-9442.2007.00509.x
Brewer, G.A., Choi, Y., & Walker, R.M. (2007). Accountability, corruption and government effectiveness in Asia: An exploration of World Bank Governance Indicators. International Public Management Review, 8(2), 204-225.
Breitung, J. (2001). The Local Power of Some Unit Root Tests for Panel Data. In: Non-stationary Panels, Panel Cointegration, and Dynamic Panels, Advances in Econometrics, ed, Badi Baltagi, 161-178. Amsterdam: Emerald
Cullis, J., Jones, P., & Jones, P.R. (2009). Public finance and public choice: analytical perspectives. Oxford University Press.
Eusepi, G., & Wagner, R.E. (2017). Public Debt: An Illusion of Democratic Political Economy. Edward Elgar Publishing.
Feldstein, M.S. (2009). Rethinking the role of fiscal policy, National Bureau of Economic Research. NBER Working Paper, No. 14684. doi. 10.3386/w14684
Fesharaki, F., & Isaak, D.T. (2016). OPEC, the Gulf, and the World Petroleum Market (Routledge Revivals): A Study in Government Policy and Downstream Operations. Routledge.
Frankel, J.A. (2010). The natural resource curse: a survey, National Bureau of Economic Research. NBER Working Paper, No. 15836. doi. 10.3386/w15836
Frenkel, J.A., Razin, A., & Yuen, C.W. (1996). Fiscal policies and growth in the world economy. MIT press.
Giddens, A. (2013). The third way: The renewal of social democracy. John Wiley & Sons.
Hauner, D., & Kyobe, A. (2010). Determinants of government efficiency. World Development, 38(11), 1527-1542. doi. 10.1016/j.worlddev.2010.04.004
Hausman, J.A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251-1271. doi. 10.2307/1913827
Hindriks, J., & Myles, G. (2013). Intermediate Public Economics. MIT Press.
Hirschl, R. (2009). Towards juristocracy: the origins and consequences of the new constitutionalism. Harvard University Press.
Hobbes, T. (2010). Leviathan-Revised Edition. Broadview Press.
Im, K.S., Pesaran, M.H. & Shin, Y. (2003). Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics, 115(1), 53-74. doi. 10.1016/S0304-4076(03)00092-7
Karl, T.L. (2007). Oil-led development: social, political, and economic consequences. Encyclopedia of Energy, 4, 661-672.
Kim, S.J., & Wu, E. (2008). Sovereign credit ratings, capital flows and financial sector development in emerging markets. Emerging Markets Review, 9(1), 17-39. doi. 10.1016/j.ememar.2007.06.001
Kumar, M. M. S., & Baldacci, M. E. (2010). Fiscal deficits, public debt, and sovereign bond yields, (No. 10-184). International Monetary Fund.
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1999). The quality of government. The Journal of Law, Economics, and Organization, 15(1), 222-279. doi. 10.1093/jleo/15.1.222
Lancia, F., & Russo, A. (2016). Public education and pensions in democracy: A political economy theory. Journal of the European Economic Association, 14(5), 1038-1073. doi. 10.1111/jeea.12170
Levin, A., Lin, C.-F., & Chu, C.-S.J. (2002). Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties. Journal of Econometrics, 108(1), 1-24. doi. 10.1016/S0304-4076(01)00098-7
Lindert, P. H. (2004). Growing public: Volume 1, the story: Social spending and economic growth since the eighteenth century, Vol. 1. Cambridge University Press.
Musgrave, R.A. (1959). The theory of public finance. McGraw-Hill Book Company, Inc.
Nijkamp, P., & Poot, J. (2004). Meta-analysis of the effect of fiscal policies on long-run growth. European Journal of Political Economy, 20(1), 91-124. doi. 10.1016/j.ejpoleco.2003.10.001
Nisbet, E.C., Stoycheff, E., & Pearce, K.E. (2012). Internet use and democratic demands: A multinational, multilevel model of Internet use and citizen attitudes about democracy. Journal of Communication, 62(2), 249-265. doi. 10.1111/j.1460-2466.2012.01627.x
Norris, P. (2011). Democratic deficit: Critical citizens revisited. Cambridge University Press.
Oates, W.E. (1968). The theory of public finance in a federal system. The Canadian Journal of Economics, 1(1), 37-54. doi. 10.2307/133460
Rhodes, R.A.W. (1996). The new governance: governing without government. Political studies, 44(4), 652-667. doi. 10.1111/j.1467-9248.1996.tb01747.x
Rose-Ackerman, S. (2010). Regulation and public law in comparative perspective. University of Toronto Law Journal, 60(2), 519-535. doi. 10.3138/utlj.60.2.519
Rose-Ackerman, S., & Palifka, B.J. (2016). Corruption and government: Causes, consequences, and reform. Cambridge University Press.
Rosen, H.S. (2003). Public finance. In The encyclopedia of public choice, Chapter 21, pp. 252-262. Springer US. doi. 10.1007/978-0-306-47828-4_21.
Rothstein, B. (2011). The quality of government: Corruption, social trust, and inequality in international perspective. University of Chicago Press.
Rouhani, F. (1971). A history of OPEC. London: Praeger.
Scharpf, F.W. (1997). Economic integration, democracy and the welfare state. Journal of European public policy, 4(1), 18-36. doi. 10.1080/135017697344217
Shelton, C. A. (2007). The size and composition of government expenditure. Journal of Public Economics, 91(11), 2230-2260. doi. 10.1016/j.jpubeco.2007.01.003
Stevens, P., & Dietsche, E. (2008). Resource curse: An analysis of causes, experiences and possible ways forward. Energy Policy, 36(1), 56-65. doi. 10.1016/j.enpol.2007.10.003
Stiglitz, J. E. (2010). Government failure vs. market failure: Principles of regulation. Government and markets. In, Government and Markets: Toward a New Theory of Regulation, E.J. Balleisen & D.A. Moss, (Eds.), pp. 13-51. Cambridge University Press. doi. 10.1017/CBO9780511657504.002
Street, J. (2010). Mass media, politics and democracy. Palgrave Macmillan.
Swank, D., & Steinmo, S. (2002). The new political economy of taxation in advanced capitalist democracies. American Journal of Political Science, 46(3), 642-655. doi. 10.2307/3088405
Tanzi, V. (1992). Fiscal policies in economies in transition. International Monetary Fund.
Ulbrich, H.H. (2011). Public Finance in Theory and Practice. Second edition, London and New York: Routledge.
Wang, C., Hong, J., Kafouros, M., & Wright, M. (2012). Exploring the role of government involvement in outward FDI from emerging economies. Journal of International Business Studies, 43(7), 655-676. doi. 10.1057/jibs.2012.18.
- There are currently no refbacks.
Journal of Economics and Political Economy - J. Econ. Pol. Econ. - JEPE - www.kspjournals.org
Copyright © KSP Journals