Government size, institutions, and export performance among OECD economies

Ioannis Bournakis and Christopher Tsoukis

Economic Modelling, 2016, vol. 53, issue C, 37-47

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)
Date: 2016
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Citations: View citations in EconPapers (11)

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Working Paper: Government Size, Institutions, and Export Performance among OECD Economies (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:53:y:2016:i:c:p:37-47

DOI: 10.1016/j.econmod.2015.11.011

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