The size of the public sector: Case of Albania

Abstract

The government is one of the key players in the economic area of each country. Its impact is evident in all areas, such as political, economic and socio-cultural ones. This impact is measured by an indicator which economists call 'the size of the public sector'. As government's influence is so significant a question naturally arises: Should the impact of the government be big or small? There are many arguments in favor and against this issue and it is difficult to come to a consensus on the extent of government's intervention in the economy. That is why the purpose of this paper is to present a picture of this intervention in the economic life of our country by connecting this indicator with the budget deficit. First, we will elaborate the progress of the size of the public sector in Albania and its measurement by various indicators. Secondly, we will compare the size of the public sector in Albanian with the sizes of the public sector of other countries in the region. Finally, we will present the results of a study on the optimal size of the public sector in the economy of a country being analyzed and in terms of our country.