Size Of Public Sector Research Articles

The shifting Scully curve: international evidence from 1871 to 2016

ABSTRACT Scully curves estimating growth-maximizing public-sector size are constructed using panel data covering 17 industrialized nations from 1870–2016. Results suggest that government expenditure-to-GDP ratios between 24% and 32% were historically growth maximizing. Instrumental variable estimates support the quadratic Scully curve relationship as causal over this period. We allow for a shifting Scully curve and find that the economic growth-maximizing size changed throughout history, from 11% pre-WWI to 21% post-WWII and 41% following the OPEC crisis. The Scully curve disappears after the mid-1990s suggesting a structural change in the relationship between central government expenditure and economic growth.

How does public spending affect technical efficiency? Some evidence from 15 European countries

AbstractThe relationship between government size and economic growth has been widely debated. Revisiting the subject from a distinct angle with respect to the mainstream approach, we provide an empirical analysis of the impact of government size on technical efficiency. The aim of this paper is to estimate the impact of public sector's size and of public expenditure components on 15 European countries’ technical efficiency from 1996 to 2014 by using a True Random Effect model. Using the total public expenditure as a proxy for the government size we estimate simultaneously national optimal production function and technical efficiency by controlling for income distribution and institutional quality. Our main findings show that the effect of public sector's size on efficiency is positive while the type of public expenditures may have both positive and negative impact. In more details, results suggest that education and health expenditures have a positive effect on technical efficiency, while others have a negative impact.

Economic Growth and the Optimal Size of the Public sector in Jordan

The relationship between the size of public sector and the rate of economic growth has been widely examined empirically in different countries. Most applied studies confirmed the validity of the inverse relationship between the increasing role of the state in the economy, measured by the ratio of public spending to gross domestic product and rates of economic growth. These studies estimated the optimum rate that would guarantee achieving the highest economic growth rates. This study aims to analyses this relationship for the case of the Jordanian economy. Using a theoretically justified econometric model, the researchers have utilized an ARDL econometric technique to quantitatively assess this relationship for the period (1970-2018). The study relied on official data related to the gross domestic product published by the Central Bank of Jordan and official data related to public spending and public revenues published by the Jordanian Ministry of Finance. The econometric results of the study confirm the existence of an inverse relationship between the size of public sector and the rate of economic growth in Jordan, which may lend support to the hypothesis of the Armey curve. The optimal size of the government (public sector) is estimated to be about 26 percent, which is much lower than the actual average government size in Jordan. The researchers recommend the need to gradually cutting down the size of public sector through adjusting the real spending structure and restructuring the independent public institutions. The restructuring of independent public institutions requires the abolition of institutions that are not economically feasible and constitute more financial burdens on society on the one hand, and the merging of a number of them into an independent public institution that provides its services to the community in an efficient and effective manner. Researchers also recommend the need to continue privatizing the public sector and activating the role of partnership between the public and private sectors. Keywords: size of public sector, government spending, economic growth, ARDL, privatization.

Unlocking Access to Finance for SMEs: A Cross-Country Analysis

Countries in the MENAP and CCA regions have the lowest levels of financial inclusion of small and medium enterprises (SMEs) in the world. The paper provides empirical evidence on the drivers of SME access to finance for a large sample of countries, and identifies key policy priorities for these two regions: economic and institutional stability, competition, public sector size and government effectiveness, credit information infrastructure (e.g., credit registries), the business environment (e.g., legal frameworks for contract enforcement), and financial supervisory and regulatory capacity. The analysis also shows that improving credit information, economic competition, the business environment along with economic development and better governance would help close the SME financial inclusion gap between MENAP and CCA regions and the best performers. The paper concludes on the need to adopt holistic policy strategies that take into account the full range of macro and institutional requirements and reforms, and prioritize these reforms in accordance with each country's specific characteristics.

La dimensión del sector público en el Ecuador y su impacto a través de la política tributaria en la competitividad de las Pymes

El presente artículo tiene como objetivo analizar el impacto de la configuración del presupuesto de ingresos y gastos en la competitividad y las posibilidades de reinversión de utilidades reinvertidas de las Pymes en Ecuador. Desde el punto de visto teórico, la investigación se sustenta en las teorías de Manzano, Pineda y Ríos (2008), Fernández, Rodríguez y Parejo (2008) y Calva & Alarco (2007). La metodología utilizada es de tipo descriptiva y explicativa de acuerdo Hernández et al. (2014). Los resultados del estudio muestran cómo el crecimiento del sector público en el Ecuador se ha traducido en una mayor necesidad de recursos, obtenidos principalmente por vía tributaria a partir de 2007. Lo anterior se ha traducido en un aumento de la carga fiscal sobre las grandes empresas y las PYMES, por su dependencia en los niveles de productividad y crecimiento económico de las primeras. Este escenario, hace insostenible dicha política fiscal en el mediano plazo, razón por la cual se requeriría de una reforma fiscal y productiva que privilegie: una política de ingresos y gastos públicos contracíclica, reducción a niveles tolerables del déficit fiscal, control severo sobre el endeudamiento y otorgamiento de estímulos fiscales a las empresas especialmente exportadoras.

IMPACT OF MACROECONOMIC INDICATORS ON PUBLIC DEBT OF SLOVAK REPUBLIC

The paper focuses on impact of macroeconomic indicators on the development of public debt in Slovakia. The aim of the paper was to identify those macroeconomic indicators which influence the most significantly public debt in Slovakia and to elaborate and verify simple model for public debt prediction. Research was based on the analysis of chosen macroeconomic indicators. Selection of macroeconomic indicators resulted from theoretical knowledge and study of various research papers. Authors used several scientific methods, such as content-causal analysis, comparison, mathematical and statistical methods, including simple linear regression. Macroeconomic indicators, which authors proved to be statistically significant, are GDP growth rate, openness of economy, size of public sector, government bond yields, and unemployment rate. Authors elaborated model of the public debt development in Slovakia by using a simple linear regression model. Regression model was calculated using the data for 1995-2016. Authors confirmed correctness of the model by using data for 2017. Research was limited by the fact, that there are limited data available for analysis (time series of 22 years) because of short existence of independent Slovakia. It will be necessary to continue with the research and to verify correctness of chosen indicators in longer period.

Optimal Size of the Public Sector in Poland in Terms of Employment

The paper contributes to the literature on the public sector optimal size. The most common approach to measure the optimal size of the public sector is based on government expenditures. The authors propose a broader approach to public sector size measurement and define it by the share in the gross value of fixed assets and the share in employment. The approach is based on the stocks of accumulated capital and labour. Contrary to most of the literature, it gives a clear answer on the optimal employment share in the public sector that leads to maximizing gross domestic product per capita. The authors use Poland as an interesting case study. Public sector size in Poland evolved during 2002–2014, thus at some point it may have achieved the optimal size. The authors analyse the effects of changes in the public sector size on gross domestic product per capita. The authors find that: (a) agricultural sector seriously lowers private sector productivity; (b) the optimal share of the public sector employment in Poland is 20%, and 24% excluding agriculture; (c) the actual share of the public sector in employment in 2014 was one percentage point larger than that which would maximize gross domestic product per capita; (d) there is significant inefficiency in the production process in Poland that can be explained by suboptimal public sector share.

Public finances, governance control and economic growth: a macroeconomic history approach

The size of the public sector is an important tool in public governance. Public sector size may fuel both economic growth and political influence over the economy. By compiling and processing data from different sources of public accounts the paper aims at mapping the development of key financial indicators for the Norwegian central government sector during the transition period from the mid 19th to the mid 20th century. The data enable us to give measures of the size of the public sector alone and compared to the overall economy. It is found that the sector started its continuous growth before politicians deliberately started to increase the sector’s size of the total economy. The paper also finds that an increase of the public sector often, but not always, reflects political economy regimes. Persistent growth in public finances as a tool for economic policy making did not take place before the introduction of the social-democratic regime in 1935. The paper also concludes that economic growth started before the growth in the public sector, suggesting that public sector growth might as well be a result of economic growth or vice versa.

The Changing Public Sector and the Contradiction of Economic Globalization

THE AIM OF THE PAPER This paper attempts to examine the impact that economic globalization has had on the public sector. In the past two decades, researchers have gradually turned their attention to international and global perspectives in their efforts to analyze the changing nature and patterns of welfare policies, development approaches and public sector systems. Accordingly, the aim of this study is to evaluate and discuss the characteristics of globalized economic processes in regard to policy-making and public service design. METHODOLOGY This study is based on mainstream literature review and secondary data analysis of the original data of OECD and World Bank report, with the aim of confirming the correlations between hyperglobalization – in other words, excessive economic liberalization associated with deep integration of markets and services – and public policy transformation. The study applies a research framework associated with public sector expenditure, economic openness and foreign trade patterns. MOST IMPORTANT RESULTS According to our results, the complex, contradictory impacts and processes of economic globalization contemporaneously have exacerbated socio-economic challenges, and have transformed the social dimensions of policy implementation. Furthermore, these multifaceted provocations have required active responses and solutions at international level. In addition, we identified that economic openness have positively correlated with public sector size — notwithstanding, the interpretation of the correlation may be influenced by several other factors, such as the “size” of nation-states. RECOMMENDATIONS The results suggest that improving public policy is indispensable for achieving good governance; and a proactive, adequate public sector might resolve the socio-economic issues that the market economy does not address. Therefore, a modernized public sector system, based on a multi-layered and multi-sectorial framework, could effectively reshape income distribution, combat poverty and counter threats related to globalization. Acknowledgements: The study has been funded by EFOP-3.6.3-VEKOP-16-2017-00007, “Young Researchers from Talented Students – Fostering Scientific Careers in Higher Education”.

A Review of Wagner's Law and Income Elasticity of the Government Expenditures in Iran (1985-2018)

Wagner's Law holds that the relative size of public sector increases with the growth of per capita income. The aim of this study is to investigate the validity of Wagner’s Law in Iran. We test the Wagner’s Law by incorporating a vector Autoregression model (VAR) and vector error correction model (VECM) for the Iranian economy using 1985-2018 health and education data. The results of the estimates show that this law holds in Iran. The elasticity of government expenditures with respect to national income must be greater than one for the Wagner’s law to hold. However, government spending on health and education have been less than expected. This could suggest that the state does not pay enough attention to health and education. One can conclude that health and education are not priorities of the government in allocating funds to these two sectors.

Evaluation of Efficiency in Selected Areas of Public Services in European Union Countries

Over the past 40 years, the service sector has become the dominant area of market economies. The public sector and services financed from public financing represent a specific group within the services sector. This paper aims to evaluate the efficiency of EU countries and find the extent to which the volume of public services (and the respective financial allocations) can have an impact on selected economic indicators. To this end, the efficiency of public expenditure in five areas of public services (general public services; health; education; social protection; and recreation, culture, and religion) in 2009 and 2016 was evaluated in relation to selected economic indicators (GDP per capita and employment in services). In addition, the efficiency of public expenditure in EU countries was evaluated in relation to the size of the public sector and traditions of public administration. For cross-country analyses within the 27 European countries, data envelopment analysis and the input-oriented variable returns to scale (VRS) model were applied. The results demonstrated that in 2009, 13 out of 27 countries were efficient as opposed to 2016, where only seven countries were efficient. In countries with bigger size of public sector, the efficiency of public expenditure on services was not established. However, there was a similarity in the efficiency of public expenditure on services between groups of EU countries regarding the tradition of public administration.

What do government unions do? Public sector unions and nonunion wages, 1977–2015

In this article we investigate the connection between public sector union memberships and nonunion worker pay. We leverage nearly four decades of Current Population Survey (CPS) data on millions of U.S. workers to test whether public sector union density, measured at the state-level, is associated with higher average wages among unorganized workers. We find stable and substantively large positive effects of state-level public sector union strength on nonunion public sector workers’ wages. These results are robust to the inclusion of a range of state-level controls, including GDP, average educational attainment, public sector size, and the strength of private sector unions. Analyses of public sector unions and nonunion private sector pay reveal a robust positive relationship – but one limited to women, revealing how occupational segregation interacts with pay-setting institutions to influence wage outcomes.

Intergenerational conflict and public sector size and structure: A rationale for debt limits?

How do budget rules influence the size and structure of the public sector? This question is considered in an overlapping generations political economy model. The different horizons of agents influence their voting behaviour and lead to excessive deficit financing and debt accumulation, reducing welfare of all subsequent generations. Along an equilibrium trajectory with increasing debt, the tax burden increases and public sector activities are crowded out due to the increasing costs of debt servicing. A debt ceiling may halt this process leading to less debt, more public consumption and higher welfare.

Hlavní determinanty ovlivňující poptávku po životním pojištění v České republice

This article examines the impact of demographic, economic and institutional determinants on life insurance demand in the Czech Republic between 1993 and 2015. Theoretical part discusses general characteristics of the insurance market, life insurance, its importance in the Czech Republic. It also includes detailed research of historical studies and articles. In empirical part is surveyed an influence of determinants on life insurance demand, using econometric models based on time series and principal component analysis. We used autoregressive distributed lag model, which defines short-term relationships between principal components and an error correction model, which examines long-term relationships between time series. It was found that an increase in average wage and banking sector size had a positive impact on life insurance demand and an increase in young dependency ratio, old dependency ratio, interest rate and net national savings had a negative impact on life insurance demand. Number of tertiary educated people, public sector size, and consumer spending were classified as insignificant variables.

The Economic Function of The State

The debate over the role of the state in the economy reaches the times when the science of economics has emerged. While the economic activities of the state are inevitable especially in times of crisis, these activities have always been criticized in terms of side effects other than affecting the crisis. This study examines the work done in the literature in terms of public sector size and the failures in economic activities. The reasons for the economic borders of the state, especially under the view of the liberal state, are the most prominent points in the study.

Does public sector crowd out entrepreneurship? Evidence from the EU regions

PurposeThe decision to engage in entrepreneurial activities is grounded in personal characteristics (motivation) and external environmental factors. One of the main external factors might be the structure of the regional economic activity. Does a high share of the public sector affect positively regional entrepreneurship or vice versa? Does the diversity in regional economic activity is conducive for entrepreneurial development or the regional comparative advantage as expressed by spatial economies of scale offering more entrepreneurial opportunities? Even though economic analysis has extensively examined the impact of the public sector size on the overall national economic activity (the crowding out effect), this impact has not been into scrutiny at regional level on microeconomic issues, such as the decision to engage in entrepreneurial activities. The authors further investigate the relation between diversity and entrepreneurship at regional level. The paper aims to discuss these issues.Design/methodology/approachThis paper uses data for 264 NUTS II EU regions. The time span of the data set is 1999-2008. The paper applies panel data analysis to explain the cross-time cross-section variation of the dependent variable: the self-employment share in total employment at regional level. In order to measure the existence of crowding out from public sector to regional entrepreneurship, the authors use the share of regional public sector gross value added over total regional gross value added. The diversity of the regional economic activity is measured by the Herfindahl-Hirschman Concentration Index across sectors.FindingsThe findings of the paper show that there is a negative correlation between public sector share and regional entrepreneurship. Hence, as at national level, the increase in the role of the public sector in the regional economic system crowds out regional entrepreneurship. The second finding indicates that the impact of the diversity of the regional economic activity on regional entrepreneurship is inconclusive.Originality/valueThe originality of this paper is due to the fact that the role of the public sector on regional economic phenomena, such as entrepreneurship, is examined for the first time. Also, the investigation of the relationship between diversity (vs localization economies) and entrepreneurship is performed using data for the full sample of regions of the European Union. The findings of the paper have significant policy implications since they provide useful inputs for the design of the regional development policy. The reduction of the public sector at regional level may contribute in entrepreneurial development and finally in regional economic growth and prosperity. Besides, the regional industrial policy should focus on the exploitation of the spatially constraint economies of scope in the framework of the Triple Helix model.

National versus Local Production

Public finance and public choice economists have contrasting views on the determinants of public sector size. This article makes a unique contribution to this literature by exploring an integer count of output, rather than the commonly used dollar approximation of output, using data that are homogeneous across the levels of government, where a unit of observation is not a governing body, but rather a service provider. Specifically, this article explores the counteracting effects of fiscal federalism and economies of scale using data from the National Institute of Justice with an application of data envelopment analysis and stochastic frontier analysis. I determine that provision of forensic science services at the national level rather than local level does not lead to higher relative cost, and national production may be relatively more efficient. In general, however, neither locally nor nationally operated laboratories are operating at an efficient scale, a potential argument for privatization, insourcing, or outsourcing.

Factors Affecting Public Expenditure Efficiency in Developed Countries

Measuring public efficiency can help governments to benchmark progress, identify gaps, and learn from best practices around the world. Our study designs Public Expenditure Efficiency Indexes, both for general government and for its functions, by using single synthetic indicators, as well as a Free Disposal Hull and a Data Envelopment Analysis model. The study also tests the association between public sector performance and public expenditure efficiency and other key socioeconomic indicators. Empirical analysis was applied in 2012 for a single cross‐section of 35 economies. Results show significant evidence of an association between public efficiency and state of development, democracy, and corruption, as well as with population density, especially in Environmental Protection. The direction of the association between public sector size and public performance differs per function. It is positive for Health and Social Protection.Related Articles Gatchair, Sonia D. 2015. “.” Politics & Policy 43 (): 887‐913. http://onlinelibrary.wiley.com/doi/10.1111/polp.12139/abstract Ariely, Gal. 2011. “.” Politics & Policy 39 (): 997‐1019. http://onlinelibrary.wiley.com/doi/10.1111/j.1747-1346.2011.00329.x/abstract Givel, Michael, and Andrew L. Spivak. 2008. “.” Politics & Policy 36 (): 420‐447. http://onlinelibrary.wiley.com/doi/10.1111/j.1747-1346.2008.00115.x/abstract Related Media 2010. https://www.youtube.com/watch?v=XXTVjXmcxqo 2015. https://www.youtube.com/watch?v=L22-2gdXDg4 2010. https://www.youtube.com/watch?v=Q4mkHu72w1k

AN ANALYSIS OF APPROACHES TO GDP DISTRIBUTION THROUGH PUBLIC SECTOR IN UKRAINE AND THE EU COUNTRIES

Urgency of the research. The true is that government has to become an arbiter of economic and financial relations and to achieve a balance between social welfare and economic advance. In order to succeed it should establish the most transparent, clear and fair rules of GDP distribution and follow them. The size of public sector must be enough to satisfy basic social needs of citizens. Target setting. There is no agreement among politicians and scholars about the sum of gross domestic product that should be redistributed by government. Therefore, every country determines the optimal size of the public sector independently. Actual scientific researches and issues analysis. Many foreign economists investigated problems of public finance. Among them are: T. Lindh, G. Olson, E. Atkinson, J. Slemrod, W. Corpi, A. Lindbek, A. Afonso, L. Shukneht. Among local scientists who study similar questions we can notice: T. Koliada, I. Lunina, T. Chernychko, D. Serebrianskii. Uninvestigated parts of general matters defining. For the lack of a common approach to GDP redistribution through the public sector, it is important to systematize and generalize of world experience in solving such problem. The research objective. The aim of this paper is to carry out a comparative analysis of approaches to GDP distribution through public sector in Ukraine and the European Union. The statement of basic materials. Welfare state models are described in the article. It appears that the level of GDP redistribution in Ukraine is close to European average. Structure of budget expenditures in Ukraine and in the EU is analyzed. It is proved the level of economic growth doesn’t depend on the size of public sector; it depends on operational efficiency of state authorities. Conclusions. This article provides a comparative analysis of approaches to GDP distribution through public sector in Ukraine and the European Union.

Public Sector Size and GDP Growth Nexus: Panel Data Estimation

The rationale of this study was to examine empirically how components of public sector size relates to GDP growth in East Africa from 1985-2015. Using balanced panel fixed or random effect model, public sector expenditure was disaggregated to scrutinize its effect of growth. The research tested for panel unit root and found that only two variables, that is, real GDP growth and capital spending - are stationary at level. The finding confirms the conventional view that relative capital spending - advances economic growth while consumption expenditure retards it. Finally, human capital allocation was insignificant. This study suggests that for these countries, the policy of increasing public sector size on investment budget to promote GDP growth will be appropriate, but fewer funds should be directed towards other governmental programs.