Government Growth

Government spending has grown relative to government output in most countries with elected governments in the post-war era. This increase is claimed to be independent of budget and tax systems, federal or national governments, and the size of bureaucracy. However, the relatively rates of change in different countries are dependent on different arrangements.

The aim of my little research was to say something about the growth of governments between 1995 and 2005 for some 20 selected OECD-countries. I have use the Borcherding government growth model to estimate a predicted growth rate and then compare this to the actual growth rate. In general, the predicted growth rates are positive and the actual growth rates are negative. Openness matters, as well as election systems.

I wanted to detect which characteristics of a country that can influence the government growth rate. My overall suspicion is that all the countries in my sample have experienced a growth in government. This prediction is this is especially aimed at the Scandinavian welfare states. I suspect that the growth rate is smaller in the liberal welfare states as the United Kingdom, and the corporatist welfare states of Continental Europe and in the US. I will also expect that the larger increase in GDP per capita, the larger the increase in government growth will be. Since we can witness more and more advanced welfare states, I will also expect the growth rates of rival goods to be higher than the non-rival goods. The wave of New Public Management (NPM) can restrain this growth, so I expect the country of the NPM-origin, the UK, to have a smaller growth rate – which I believe holds for other liberal democracies and the US as well. Further, I believe that semi-presidential democracies and single-party majority governments will have a smaller growth rate, since this can function as controllers of inefficient universalistic allocation and overspending. Another suggestion is that majoritarian election democracies have a larger government growth than proportional representation democracies.

Finally, I will also suspect small and open economies to have larger public expenditure to be able to stand against economic shocks, than the big and more self-sufficient countries in my sample.

Curious? Check the findings in the attached paper.

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