Promoting or Inhibiting? The Relationship between Government Size and Ease of Doing Business

Lihua Wang, Jie Song and Jiayue Qin

Global Economic Review, 2025, vol. 54, issue 2, 95-119

Abstract: The relationship between government size and the ease of doing business (EODB) in a country is examined based on resource-based theory, organisational inertia theory, and existing literature. Heterogeneity analysis of publicly available data from 161 countries in 2016–2020 revealed an inverted U-shaped relationship between government size and EODB level that was more pronounced in countries with lower political stability, income, and government artificial intelligence (AI) readiness levels. This study contributes to the theoretical discourse on this topic while offering policymakers a reference for determining the optimal government size for enhancing EODB considering country-specific factors.

Date: 2025
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DOI: 10.1080/1226508X.2025.2524315

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