The welfare state, institutions and export performance

Bournakis, Ioannis; Tsoukis, Christopher

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

Bournakis, I., & Tsoukis, C. (2016). The welfare state, institutions and export performance. Economic Modelling, 53, 37 - 47. https://doi.org/10.1016/j.econmod.2015.11.011

• Journal Article Type: Article
• Acceptance Date: Feb 1, 2016
• Online Publication Date: Dec 4, 2015
• Publication Date: Feb 1, 2016
• Publicly Available Date: May 26, 2023
• Journal: Economic Modelling
• Print ISSN: 0264-9993
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 53
• 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