The Role of the State in Economic Development. Do Government Expenditures Promote Growth in Developing Countries?

Thèse de Master , 2018 , 41 Pages , Note: 7

Economie politique - Conjoncture et Croissance

This paper examines the role of the state in economic development. In particular, we test the impact of aggregated and sectoral government expenditures on economic performance in developing countries. Our findings suggest that total government expenditures are negatively related to economic development in both low income and middle income developing countries. However, we find particular evidence that government expenditures prove to be more beneficial for growth when a country is characterized by a well-functional institutional design.

In contrast to previous studies, we do not find positive and significant results for sectoral government expenditures. In fact, our findings suggest that transport and communication, defense and health expenditures are negatively related to economic development. At the same time, public and private investments appear to be positively related to economic development throughout our analysis. Therefore, we conclude that – instead of government expenditures – stimulating investments and institutional reforms should play a major part on the political agenda of developing countries.

Table of Contents

Abstract

Table of Contents

Table of Figures

1. Introduction

2. Literature Review
2.1 Theories of Economic Development
2.2 The Role of the State in Economic Development
2.3 Government Expenditures, Institutional Quality and Growth
2.4 Sectoral Government Expenditures and Growth

3. Data and Methodology
3.1 Economic Model
3.2 Data Sources

4. Results
4.1 Baseline Results
4.2 Robustness Tests

5. Policy Implications and Concluding Remarks

6. Limitations

7. References

8. Appendix

• Université: University of Groningen (Faculty of Economics and Business)
• Note: 7
• Auteur: David Schmengler (Auteur)
• Année de publication: 2018
• Pages: 41
• N° de catalogue: V921004
• ISBN (ebook): 9783346240002
• ISBN (Livre): 9783346240019
• Langue: anglais
• mots-clé: government expenditures, institutional quality, economic development