Impact of the government size on economic growth in the Western Balkan countries

The Keynesian theory states that economic growth is positively affected by government spending, while Classical theory states that economic growth is negatively affected by government spending, as is stated by neoclassical public choice theorists (Nyasha & Odhiambo, 2019). Based on these theories, many authors have carried out research on the impact of economic freedom on economic growth by analyzing various empirical cases. Bergh and Karlsson (2010) with the findings from his paper confirmed that the countries with the highest government size have an elevated growth in the globalization index of KOF and the Fraser Institute’s economic freedom index. The main aim of this paper is to analyze the government size impact on the growth of the economy in the Western Balkan in the time period 2000–2017 according to Fraser Institute’s data, incorporating the following econometric models: fixed and random effects, pooled ordinary least squares (OLS), and Hausman-Taylor IV. With these models, this paper analyzes a government size and its components: government enterprises and investment, government consumption, transfers, and subsidies. The results illustrate a relationship between the size of the government and the growth of the economy in the Western Balkans that is positive. 1% increase in government size affects 0.29% gross domestic product (GDP) growth per capita. According to the Hausman-Taylor instrumental variable, 1% growth of government consumption is affected by 0.69% the decline in GDP per capita. The growth rate of transfers and subsidies affects 0.17% of GDP growth per capita and 1% of government enterprises and investment affects 0.54% GDP growth per capita.

Financial Performance and Human Development with Control of Regional Characteristics

Regional autonomy is a policy given by the central government to local governments. The granting of this right to autonomy will encourage the acceleration of economic development in the community. Local governments begin to regulate all affairs in their regions independently so that they will be faster in overcoming all existing problems, including problems of community welfare. The implementation of regional autonomy also gives full rights to regional governments, including in financial management in the regions. Effective, efficient, transparent and responsible financial management is an important basis for improving the community's welfare. Of course, increasing the financial performance of local governments will also increase the human development index. The performance of the local government needs to be assessed as a form of our supervision to the government. This government performance assessment can be measured through the ratio of regional independence, effectiveness and efficiency. In addition, proper management of existing resources in the area will be able to improve the welfare of the community. The purpose of this study is to empirically test the ratio of independence, effectiveness, efficiency to the human development index by controlling regional characteristics in the form of capital expenditures, operational expenditures, government size, regional original income, and population. The amount of data in this study were 29 districts and 6 cities in Central Java during 2015-2019. The results of this study state that the independence ratio, effectiveness ratio, and efficiency ratio can have a significant effect on the human development index. In addition, the control variables for regional characteristics in the form of capital expenditures, operational expenditures, government size, and population are able to influence the human development index. Meanwhile, local revenue has no effect on the human development index.

Economic efficiency of national governments: case study of Poland and Ukraine

The article proposes a new unique approach to assessing the economic efficiency of national governments. The assessment is based on the indicator of gross free product per capita, which is a difference between GDP and government size per capita. This method was used to analyze the situation in two post-communist states – Poland and Ukraine. The author studied their economic development in 2009–2019, and the received data was used to draw conclusions about economic policies in the two countries in the period in question. A forecast has been made about the possible impact of the Covid-19 pandemic on economic processes from the perspective of changes in the gross free product per capita.

Asymmetric Determinants of CO2 Emissions in China: Do Government Size and Country Size Matter?

CO2 emission reduction is a long-term strategy for China to promote its government and country size. However, this study examines the asymmetric impact of government size and country size on CO2 emissions in China. The study embraces the nonlinear ARDL framework of time series data analysis as proposed by Shin et al. (2014), which disentangles the positive and negative shocks to government size and country size. We find that the response of CO2 emissions to government size and country size positive shocks differs from the negative shocks. Empirical outcomes revealed that a positive shock of government size exerts an insignificant positive on CO2 emissions, while a negative shock of government size reduces CO2 emissions. More specifically, a positive shock of country size mitigates the CO2 emissions of China in long run. Policymakers should redesign the energy and environment policies in the framework of government size and country size.

Determinants of Government Characteristics and Audit Findings on Local Government Financial Performance

This study is based on the low success of local governments' financial performance in West Java Province, as evidenced by the fact that financial reports of local governments that receive unqualified opinions are still being found. The detection of numerous frauds in local governments is responsible for the majority of incidents of poor financial performance in local governments. Local government financial performance is related to local government size, dependence on central government, local spending, and audit findings. The purpose of this study was to examine the influence of local government characteristics and audit findings on the financial performance of local governments. Techniques analyzing data used regression model selection test with STATA version 16. This study builds on agency theory to develop a conceptual framework that connects local government size, dependence on central government, local expenditure, audit findings, and financial performance. The results of this study show that the size of local government, local spending has a significant effect on local government financial performance based on independence ratio and operating expenditure activity ratio, local government financial performance is unaffected by the dependence of central government or audit findings. Contributions to the West Java Provincial Government are required to be taken into account when making decisions and policies for the improved financial performance of local government.

Pengaruh Kualitas Institusi, Pengeluaran Pemerintah, dan Foreign Direct Investment terhadap Pertumbuhan Ekonomi

Pertumbuhan ekonomi di negara berkembang rentan terhadap fluktuasi ekonomi global seperti krisis ekonomi 2008 dan kembali mendapat hambatan dengan terjadinya resesi akibat pandemi Covid-19. Penelitian ini memiliki dua tujuan. Pertama, menganalisis pengaruh kualitas institusi, government size, dan foreign direct investment terhadap pertumbuhan ekonomi. Kedua, menganalisis pengaruh kualitas institusi dan government size terhadap pertumbuhan ekonomi melalui FDI. Terdapat dua metode analisis yang digunakan dalam penelitian ini, yaitu regresi data panel pendekatan common effect model (CEM) dan analisis jalur. Objek yang digunakan penelitian 9 negara berkembang Asia tahun 2012-2019. Hasil penelitian menunjukkan bahwa variabel kualitas institusi yang terdiri dari voice and accountability, political stability and absence of violence/ terrorism, dan regulatory quality berpengaruh signifikan terhadap pertumbuhan ekonomi, sedangkan control of corruption tidak berpengaruh signifikan. Di samping itu, government size tidak berpengaruh signifikan terhadap pertumbuhan ekonomi, tetapi foreign direct investment berpengaruh signifikan terhadap pertumbuhan ekonomi. Lebih lanjut, secara tidak langsung semua variabel kualitas institusi tidak berpengaruh signifikan terhadap pertumbuhan ekonomi melalui FDI. Sebaliknya, government size berpengaruh signifikan terhadap pertumbuhan ekonomi melalui FDI. Pemerintah dapat melakukan reformasi regulasi, meninjau kembali alokasi pengeluaran pemerintah, dan menyaring arus masuk FDI untuk meningkatkan pertumbuhan ekonomi di negara berkembang.

The Effects of Fiscal Decentralization on General and Local Government Size: Does Composite Index Matter?

This article examines the impact of fiscal decentralization on the size of both general and local government using data for 36 countries over the period 1972–2019 and GMM. Our results consistently suggest that fiscal decentralization does not exert a significant impact on general government size. On the other hand, there exists a positive relationship between fiscal decentralization and local government size. We should note that our baseline regression results don’t significantly change when we use different fiscal decentralization indexes. Therefore, we don’t find any evidence for the argument that fiscal decentralization would be helpful to restrict the expansion of government size. Moreover, we present some evidence for the flypaper effect. Additionally, we find a positive relationship between the fiscal importance and local governments, interpreted as an indicator of expenditure competition instead of race to bottom.