The Role of Government Activities in Explaining the Growth Failure of the Oil Exporting Countries

Masoud Nili and Solmaz Moslehi
Additional contact information
Masoud Nili: Graduate School of Management and Economics, Sharif University of Technology
Solmaz Moslehi: Graduate School of Management and Economics, Sharif University of Technology

Journal of Money and Economy, 2009, vol. 5, issue 2, 149-191

Abstract: Most of the growth empirics emphasize the ambiguous impact of government activities on economic growth. The provision of public goods and development of infrastructures, on the one hand, stimulate economic activities. But on the other, the contractionary effect of tax collection, through lowering the saving rate and investment, depresses economic growth. In the standard growth models such as Barro (1990), government size is related to economic growth within an inverted "U" curve framework. The government involvement in the economy, however, is not restricted to budgetary activities. Governments own enterprises and they also intervene into different markets. This is specifically the case in developing countries. In assessing the impacts of government activities on economic growth, we need to take into account each role played by the government separately. In this paper, we have examined the significance of government activities for the economic growth of the oil exporting countries, through three channels of: government expenditure, ownership of enterprises, and intervention in the economy. The results indicate that the distortionary impact of government intervention, in addition to a government size much bigger than its optimal, contribute significantly to the observed phenomena, known as the growth failure of the oil exporting countries.

Keywords: ECONOMIC GROWTH; OIL ECONOMIES; GOVERNMENT SIZE; GOVERNMENT OWNERSHIP; GOVERNMENT INTERVENTION (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations:

Downloads: (external link)
http://jme.mbri.ac.ir/article-1-400-en.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmonec:v:5:y:2009:i:2:p:149-191

Access Statistics for this article

More articles in Journal of Money and Economy from Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran Contact information at EDIRC.
Bibliographic data for series maintained by M. E. ().