Government size, institutions and export performance among OECD economies

Tsoukis

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.

Citation

Tsoukis. (2015). Government size, institutions and export performance among OECD economies. Economic Modelling, 37-47. https://doi.org/10.1016/j.econmod.2015.11.011

• Acceptance Date: Nov 12, 2015
• Publication Date: Dec 4, 2015
• Journal: Economic Modelling
• Print ISSN: 0264-9993
• Publisher: Elsevier
• Pages: 37-47
• DOI: https://doi.org/10.1016/j.econmod.2015.11.011
• Keywords: Export shares; Government size; Institutions; Unit labour cost; Competitiveness
• Publisher URL: https://doi.org/10.1016/j.econmod.2015.11.011