Size Of Government Research Articles

Determinan Kinerja Keuangan Pemerintah Kabupaten/Kota di Provinsi Sumatera Selatan

This study analyzes the determinants of financial performance in the District/City Governments of South Sumatra Province using panel data from 2017 to 2021. The independent variables examined are Regional Government Prosperity, Regional Government Size, Regional Government Dependency Level, and Capital Expenditure. The research applies the Common Effect Model (CEM) approach for panel data regression analysis. Data is sourced from local government financial reports and other statistical data. The findings reveal that Regional Government Prosperity and Regional Government Size have a significant positive impact on financial performance, while the Regional Government Dependency Level has a significant negative impact. However, Capital Expenditure does not significantly influence financial performance. Simultaneously, the variables of Regional Government Prosperity, Regional Government Size, Regional Government Dependency Level, and Capital Expenditure exert a significant influence on the financial performance of District/City Governments in South Sumatra Province.
 

European Union funds and corruption in the ex-communist member states

ABSTRACT The paper analyses the impact of European Union (EU) funds on corruption in the EU ex-communist countries by following a panel Autoregressive Distributed Lag (ARDL) approach. The panel includes 10 former EU communist countries, over 2007–2019. The key findings reveal that an improvement in the EU funds paid and their rate of absorption can reduce the level of corruption in the long-run in the recipient EU ex-communist countries. This is due to better monitoring of EU funds paid compared with national resources, and a more efficient and fairer channel of EU funds absorption. In parallel with the EU funds, corruption can be controlled in certain conditions by the degree of economic development, size of government, level of democratisation and religiosity.

Does economic freedom foster education in Sub‐Saharan Africa?

AbstractThis study investigates the effect of economic freedom on education in Sub‐Saharan Africa. We used a panel of 41 countries covering the period 2000–2019 and the two‐stage least squares (IV‐2SLS) estimates. We find that economic freedom fosters secondary education. Furthermore, we find that the five components of economic freedom have varying effects on education. Indeed, size of government increases secondary education. Legal system increases secondary and tertiary education, while freedom to trade fosters primary and secondary education. In contrast, sound money has a negative impact on primary and tertiary education. These results are robust when we consider education by gender.

The Moderating Effect of Institutions in Government Expenditures - Economic Development Nexus in ECOWAS Countries

The total effect of growing public spending on economic development is ambiguous, especially with today’s realities of exposure to international trade and domestic factor such as institutions. Hence, the objective of this study is to test the hypothesis that good institutions moderate the effect of large government size on economic development. The study employed secondary data covering the period 1986 to 2018 and Arellano and Bover’s Generalized Methods of Moments (GMM) panel estimation technique was used to achieve the study objective. Data on Gross Domestic Product per capita, government size, population growth rate, inflation rate, gross fixed capital formation, human development index (HDI) and financial development were sourced from World Development indicator database while data on institutions was obtained from International County Risk Guide database. The study found that the stated hypothesis is validated i.e good institutions mitigate any negative effect of large government size on economic development for Economic Community of West African States (ECOWAS). The study therefore, concluded that the relationship between government size and economic development depends on quality of institutions in ECOWAS countries. It is recommended that member countries should embrace democratic governance and build democratic institutions in order to promote government stability. More so, there is need to tightening up of existing public sector rules and regulations on corruption and the setting up of anti-corruption institutions to fight corruption and check corrupt behaviour in the ECOWAS countries.

Influence factors on financial statements disclosure of Indonesian local governments

This study aims to examine the factors that affect the level of disclosure of local government financial reports. This paper uses such independent variables as budget expenditure of the local government, government size, and capital expenditure. The financial records of Indonesian local governments that have undergone audit by the supreme agency are analyzed in this study. For the 2020 timeframe, 485 local/city governments in Indonesia served as the research samples, and purposive sampling was employed as the sampling method. SPSS is utilized to support multiple linear regression, which is the data analysis method used in this study. The test findings revealed that budget expenditure (β = 0.274; p < 0.05), government size (β = 0.216; p < 0.05), and capital expenditure (β = 0.178; p < 0.05) have a significant effect on the level of local government financial statements disclosure. It is envisaged that the findings of this study would enable local governments, particularly districts or cities, to better maximize the disclosure of local government financial statements in compliance with government regulation. Local governments will be able to open up information that is easily accessible with the aid of ever-improving technology.

The Determining Factors of the Delocalization of Italian Companies to East European Countries

Reflections on the factors that influence the delocalization of Italian companies to other countries, arising from a rapidly changing world economy, offer invaluable insight into companies facing similar tough choices. Usually, this decision is attributed to economic, fiscal, and institutional factors. This article examines the process of delocalization of Italian enterprises and empirically verifies the main factors which influence the delocalization of Italian enterprises to East European Countries. The results suggest that “labor market regulation”, “business regulation”, and “size of government” or better said, the labor cost the host country, is the main incentive of Italian enterprises to delocalize their production. Empirical results also show that institutional factors such as “rule of law”, “control of corruption”, “political stability”, and “broadband infrastructure” have a positive and significant correlation with the delocalization of Italian enterprises to the East European Countries. The results in this case suggest that Italian companies are looking for an environment in which the state knows how to enforce their own rules, but also a state that is somewhat “corruptible”.

Determinants of Military Spending in Africa: Do Institutions Matter?

Abstract This paper focuses on the determinants of military spending in Africa by considering the role played by institutions. With data obtained between the years 1996–2019, the Driscoll and Kraay fixed effects, the Generalised Method of Moments (GMM), and the Bayesian Model Averaging (BMA) estimators are used. The findings suggest that government size, trade freedom, economic risk, and political risk decrease military spending, whereas government stability and military involvement in politics are found to raise it. Using alternative institutional variables, we find that corruption, government effectiveness, political stability, regulatory quality, the rule of law, and voice and accountability significantly diminish military spending in Africa. In addition, concerning the economic determinants, the results reveal that trade openness and total natural resource rents reduce military spending, while GDP per capita, inflation, and foreign debt stocks increase it. Looking at strategic determinants, arms imports, urban population, and ethnic tensions positively affect African military expenditures. Robustness checks show that these results change once regional specificities are considered. The study concludes that institutional factors could be an engine for evolution in Africa’s military spending.

The Impact of Resource Exploration and Capital Expenditures on the Realization of Local Government Budgets in Indonesia

This study aims to determine how factors, namely the period of government, gender, government size, and capital expenditure, can affect the realization of the 2018–2021 government budget. This study used a saturated sample consisting of the entire population, namely all provinces in Indonesia for the 2018–2021 period, with a total of 34 provinces, so a sample of 136 was obtained. In this study, the data analysis methods used were descriptive statistics, multiple linear regression analysis, namely the standard effect model, fixed effect model, and random effect model, and hypothesis testing, namely the coefficient of determination test (R2), simultaneous test (F), and partial test (t). The data used are statements of financial position and budget realization reports obtained from the official BPK website, namely https://www.bpk.go.id/ihps. The data were analyzed using STATA v.16 software. Based on the test results, the research results obtained were that the variables of government period and gender did not affect the realization of provincial and local government budgets in Indonesia. Meanwhile, government size and capital expenditure variables affect the realization of provincial government budgets in Indonesia.

On government spending and income inequality under monopolistic competition

AbstractThis paper systematically examines the theoretical and quantitative interrelations between government spending and disposable income inequality in a tractable monopolistically competitive Ramsey macroeconomy. Upon an increase in government size, we analytically show that whether the long-run after-tax Gini coefficient rises or falls depends on the sign and magnitude of the wealth/capital inequality effect versus those of the adjusted-labor effect. Under (i) a mild level of productive public expenditure externalities and (ii) a sufficiently high intertemporal elasticity of consumption substitution, our calibrated model is able to generate qualitatively as well as quantitatively consistent income inequality effects of government spending vis-à-vis recent estimation results.

Economic growth before and after the fiscal stimulus of 2008–2009: the role of institutional quality and government size

Economic growth before and after the fiscal stimulus of 2008–2009: the role of institutional quality and government size

Productivity Gap between the “New” and “Old” Europe and Role of Institutions

The present study examines how policy makers should consider the quality of institutional framework to reduce the productivity gap and increase a country’s ability to absorb superior technologies developed elsewhere. This paper analyzes the impact of components of economic freedom, such as the size of government, regulation, and freedom to trade internationally, and world government indicators, such as political stability and absence of violence/terrorism, regulatory quality, and control of corruption on the productivity gap between the “Old” and “New” Europe countries. This is among the first studies to investigate, in a sample of former socialistic countries, the impact of institutions on a country’s ability to adopt superior technology developed elsewhere. A static panel analysis was applied on cross-sectional data from the eleven EU countries. The results strongly support the productivity convergence between the “Old” and “New” Europe countries, with a positive impact of the institutions on the productivity growth. However, the impact of the institutions fades the further the country is from the frontier.

Financial development in South Africa: The role of natural resources, IT infrastructure, and government size

Financial development in South Africa: The role of natural resources, IT infrastructure, and government size

Reconsidering agricultural credits and agricultural production nexus from a global perspective

AbstractAccess to credit has been a key component in protecting a country's agriculture sector against uncertainties and climate‐related shocks. Agricultural credits may also increase both agribusiness sectors' and farming‐related commercial activities' exposure to world markets. This study aims to investigate agricultural credits' short‐run and long‐run effects on agricultural production using control variables such as foreign direct investments, inflation rate, and government expenditures. We found that credits to agriculture affect value‐added agriculture positively in the long‐run; specifically, when agricultural credits increase by 1%, value‐added agriculture will increase by 0.19%; that is, an increase in credits to the agricultural sector leads to a significant increase in value‐added agriculture, while FDI and government size both reduce agricultural value‐added across countries. The findings of the pairwise causation test show that bidirectional causal links exist among almost all variables, validating feedback among agricultural value‐added, credit to agriculture, FDI, government expenditures, and inflation.

FDI Flows and the Effects of the Shadow Economy: Evidence from Gravity Modelling

This paper analyzes the question of if the size of the shadow economy affects foreign direct investment (FDI) flows and what effects, if any, there are. Since about 1990, FDI has become the second crucial pillar of economic globalization in OECD countries and worldwide; such FDI inward and outward flows contribute to higher per capita income and international technology transfer. To analyze this question, both fixed effects, as well as dyadic fixed effects gravity models, are used on an OECD-only dataset that allows for data on bilateral, bidirectional FDI flows for the years from 1992-2018. The empirical results suggest a positive effect of the shadow economy for FDI target countries and a negative effect for FDI origin countries. Additional findings via an interaction term show that the shadow economy can counteract the negative effects of an increase in government size on FDI inflows. From a policy perspective, changes in the size of the shadow economy – typically taking place in periods of recession, in a high taxation environment, or in the context of a pandemic shock – should be carefully monitored by economic policymakers as well as by policy monitoring international organizations such as the IMF and the EBRD. If a group of (OECD) countries decides to adopt anti-shadow economy economic policies, there will be pressure on other (OECD) countries to also adopt similar policies since the difference between the size of the shadow economy in the source country and the host country has a negative impact on FDI inflows. Thus, FDI could indirectly be a catalyst for reforms. Keywords: international economics, foreign direct investment, gravity model, shadow economy, OECD countries JEL classification: C23, E26, F21, F23

Does Economic Freedom Improve FDI Inflows in Sub-Saharan Africa?

The objective of this study is to investigate the effect of economic freedom on foreign direct investment (FDI) in Sub-Saharan Africa (SSA). To this end, we employed a panel data analysis across 41 countries over the period 2000-2020. We used a two-stage least squares (2SLS) estimation method to address potential endogeneity issues. We found that economic freedom plays a crucial role in enhancing FDI inflows in SSA. Specifically, the results suggest that certain dimensions of economic freedom, such as the size of government and the legal system and property rights. Have a positive effect on FDI inflows in SSA. Conversely, components or dimensions like sound money and regulation have a negative impact. Freedom to trade has a positive sign on FDI. Regardless, these effects are statistically insignificant. Based on these outcomes, SSA countries should prioritize consolidating public spending on infrastructure development and enhancing the quality of investments in human capital formation. Additionally, strengthening the legal framework by ensuring the rule of law and a functional justice system that effectively safeguards the rights of investors is also necessary.

Corruption and Total Factor Productivity in the Long-Run: Evidence from Post-WW2 Turkey

ABSTRACT In this study, we investigate the relationship between corruption and total factor productivity (TFP) in Turkey. Our study contributes to the literature in several ways in terms of data, empirical specification, and method. First, we use a new and novel index of corruption for Turkey between the years 1950 and 2014. Second, we estimate the long-run cointegrating relationship between corruption and TFP in Turkey. Finally, we not only investigate how corruption affects TFP, but also if this effect is conditional on government size. We find that corruption decreases TFP in the long-run and its adverse effects on TFP increases with government size.

Determinants of Local Government Financial Performance in Indonesia

Regional autonomy is expected to promote financial performance and people’s welfare. This study investigates factors that affect local governments’ financial performance in Indonesia, where performance is defined as the ability to generate local revenues. To test our hypothesis, we used panel data regression analysis. From 2012 to 2019, this study collected 3,747 observations on municipal governments. The dependent variable is local government financial performance, while the independent variables include region size, capital spending, financial reporting quality, audit recommendations, and the horizon problem. We find that the size of the local government, financial reporting quality, and the follow-up on audit recommendations positively affect financial performance. Larger local governments have more resources to generate revenues. High financial reporting quality and accountability are supposed to improve public trust and increase their willingness to make contributions through local tax payments. Capital expenditure, on the other hand, is associated with lower financial performance. This study contributes to the literature on financial performance, especially in the public sector, by providing empirical evidence on factors affecting local government financial performance. This study provides insight to stakeholders by providing evidence on the role of size, capital spending, audit opinion, and follow-up of audit recommendations in accelerating the improvement of financial performance. 
 
 Received: 13 July 2023 / Accepted: 25 August 2023 / Published: 5 September 2023

Education spending, economic development, and the size of government

Education spending, economic development, and the size of government

INSTITUTIONAL DIMENSIONS AND ALLOCATION OF ENTREPRENEURIAL TALENTS TOWARD INNOVATIVE ACTIVITY IN NIGERIA

This study explores how certain institutional dimensions influence entrepreneurial allocations in Nigeria and its sectorial heterogeneity. We apply unconditional fixed-effect Tobit regression estimators on a combined dataset extracted from various sources over the period 2011-2015. Our findings suggest that property rights and oil rents strongly encourage young entrepreneurs to be innovative, while a number of business procedures and the rule of law discourage them from being innovative. The findings suggest that some of the institutions are complementary to one another in improving entrepreneurial innovativeness. Interactions between them are positive and significant. Sectorial results reveal that property rights, government effectiveness and oil rents significantly enhance entrepreneurial innovativeness, whereas government size reduces innovativeness among young entrepreneurs in the manufacturing sector. In the IT sector, property rights, control of corruption, regulatory quality and government effectiveness increase entrepreneurial innovativeness. Government size, business procedures and the rule of law reduce innovativeness. Overall, the institutions appear to have stronger and bigger effects in the IT sector than they do in the manufacturing sector. Policy implications include the need for institutional reforms targeting productive entrepreneurship to focus more on making business regulation and procedures more competition-friendly and less cumbersome and strengthening the quality of anti-graft and property right institutions.

U.S. agency growth aspirations and the effect of ideological extremism

AbstractDoes ideological extremism curb a public agency's desire to grow? This article theorizes that changes in the political environment affect a public agency leader's growth aspirations. Specifically, increased ideological extremism across an agency's elected principals leads an agency leader to be more cautious and less growth‐minded. The assessments of over 10,000 American state agency leaders are studied across 11 points in time from 1964 to 2018 and matched to data capturing the leader's ideological environment. Agency leaders, who face heightened extremism from elected state officials, are found to report a reduced interest in future growth. The results are strongest during periods of divided government, which may occur because the signal sent from greater extremism is more useful to agency leaders during these periods. When aggregated across thousands of agencies, the article's findings imply a driver of slower growth in the future size and scope of government.