Government Size, Institutions, and Export Performance among OECD Economies

Ioannis Bournakis and Christopher Tsoukis

MPRA Paper from University Library of Munich, Germany

Abstract: With a panel of 18 OECD countries, 1980-2005, we investigate the determinants of export performance, in particular the effects of the size of government and institutional features. In a model of endogenous extent of domestically-produced goods, government size has a non-linear effect on export performance; the export-maximising size of government (tax receipts) is around 40-45% of GDP; the best size of productive government spending is around 16% of GDP. Product market and labour market-related rigidities affect negatively the export performance both on their own and via a negative effect on the effectiveness of R&D and slow down the speed of adjustment. Among traditional variables, relative unit labour cost, R&D shares in GDP, TFP growth and human capital show up significantly and with the expected signs.

Keywords: Export shares; government size; institutions; unit labour cost; competitiveness (search for similar items in EconPapers)
JEL-codes: E02 F14 F41 (search for similar items in EconPapers)
Date: 2015-11
New Economics Papers: this item is included in nep-cse, nep-fdg, nep-int and nep-pbe
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Related works:
Journal Article: Government size, institutions, and export performance among OECD economies (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:68112

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