The Relationship between the Size of Government and Economic Growth: The Case Study of Six OPEC Countries Based in the Persian Gulf Area

Heidari, Hassan; Parvin, Soheila; Fazeli, Mohammad

doi:10.22055/jqe.2010.10644

The Relationship between the Size of Government and Economic Growth: The Case Study of Six OPEC Countries Based in the Persian Gulf Area

https://doi.org/10.22055/jqe.2010.10644

Volume 7, Issue 3 - Serial Number 3
Autumn 2010

Pages 43-66

Quarterly Journal of Quantitative Economics (JQE)

Document Type : Research Paper

Authors

Hassan Heidari

Soheila Parvin

Mohammad Fazeli

Abstract

Besides providing securities and transfer payments to maintain welfare and social harmony, governments can provide economic infrastructures to facilitate economic growth improve resources allocation and enhance productivity of the economy. These latter activities of governments ignited considerable debates among economists about the role of the governments and their impact on the economic growth. This paper investigates the empirical relationship between the size of government and economic growth of the 6 OPEC countries based in the Persian Gulf area, over the 1970–2007 period using panel data pattern. The applied models are adopted from Dar and Amirkhalkhali (2002) and Anaman (2004) studies. Our results indicate that, government size in these countries is large, as their government are impart from oil revenues which has negative effects on investment of private sector and then, decrease GDP. Results also indicate that, growth rate of labor force, growth rate of capital and growth rate of export have positive effect on growth rate of GDP.

Keywords

Government Size

Economic Growth

panel data pattern

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