The Effect of Openness and Democracy Level on Government Size: Evidence of Rodrik Hypothesis From Transition Economies

Year 2014, Volume: 14 Issue: 3, 345 - 360, 01.08.2014

Mahmut Zortuk Berna Beşer

Abstract

In this study, Rodrik hypothesis, which suggests positive relationship between government size and the risk from trade openness, is analyzed for 24 transition economies for the period 1990-2011. In the first part of the empirical analysis, it is found that the strong democracies among transition economies are partly inclined to satisfy Rodrik hypothesis. In the second part, the validity of Rodrik hypothesis is obtained for the mixed regime transition economies which are Bosnia and Herzegovina, Ukraine, Georgia and Moldova. Among these countries, government size is positively related with the external risk independent from the trade openness

Keywords

Government size, openness, transition economies, rodrik hypothesis

Dışa Açıklık ve Demokratik Yapının Kamu Kesimi Büyüklüğü Üzerindeki Etkisi: Rodrık Hipotezine Geçiş Ekonomilerinden Kanıt

Abstract

Bu çalışmada, 24 geçiş ekonomisi için dışa açıklıktan kaynaklanan risk ile kamu kesimi büyüklüğü arasında pozitif yönlü bir ilişkinin olduğunu öne süren Rodrik hipotezinin geçerliliği 1990-2011 dönemi için sınanmıştır. Ampirik analizin ilk kısmında, demokratik yapısı güçlü geçiş ülkelerinin Rodrik hipotezini sağlamaya kısmen daha yatkın olduğu bulgusu elde edilmiştir. İkinci kısımda ise, karma rejime sahip Bosna Hersek, Ukrayna, Gürcistan ve Moldova’da Rodrik hipotezinin geçerli olduğu tespit edilmiştir. Bu ülkelerde kamu kesimi büyüklüğü, ticari açıklıktaki değişmelerden bağımsız olarak dış risk ile pozitif ilişkilidir

Keywords

Kamu kesimi büyüklüğü, dışa açıklık, geçiş ekonomileri, rodrik hipotezi

References

• Abizadeh, S. (2005) “An Analysis of Government Ex- penditure and Trade Liberalization” Applied Economics, 37:1881-1884.
• Adsera, A. ve Carles, B. (2002) “Trade, Democracy, and the Size of the Public Sector: The Political Under- pinnings of Openness” International Organization, 56(2):229-262.
• Alesina, A. ve Wacziarg, R. (1998) “Openness, Co- untry Size and Government” Journal of Public Economics, 69:305–321.
• Bahmani-Oskooee, M. ve Niromand, F. (1999) “Openness and Economic Growth: An Empirical Investi- gation” Applied Economics Letters, 6:557-561.
• Bal, H. (2004) “Geçiş Ülkelerinde Yolsuzluk Ve Kayıtdışı Ekonomi: Kırgızistan Bavul Ticareti Örneği” http://yordam.manas.kg/ekitap/pdf/Manasdergi/sbd/ sbd9/sbd-9-10.pdf, (18.09.2012).
• Balle, F. ve A-Ashish, V. (2010) “A Regional Analysis of Openness and Government Size” Applied Economics Letters, 9:289-292.
• Benarroch, M. ve Manish, P. (2008) “Trade Openness and Government Size” Economics Letters, 101:157-159.
• Benarroch, M. ve Manish, P. (2012) “The Relations- hip Between Trade Openness and Government Size: Does Disaggregating Government Expenditure Matter?” Jour- nal of Macroeconomics, 34:239-252.
• Cameron, D. (1978) “The Expansion of the Public Economy: A Comparative Analysis” American Political Science Review, 72:1243–1261.
• Choi, I. (2001) “Unit Root Tests for Panel Data” Jo- urnal of International Money and Finance, 20:249–272.
• Çokünlü, E.G. (2007) “Geçiş Ekonomilerinde Makro Ekonomik Istikrar Sorunları: Rusya Örneği” Uludağ Üni- versitesi, Yayınlanmamış Doktora Tezi, Bursa.
• Dickey, D.A. ve Fuller, W.A. (1979) “Distribution of the Estimators for Autoregressive Time Series with a Unit Root” Journal of the American Statistical Association, 74:427-431.
• Down, Ian, (2007) “Trade Openness, Country Size and Economic Volatility: The Compensation Hypothesis Revisited” Business and Politics, 9(2):1-20.
• Epifani, P. ve Gancia, G. (2008) “Openness, Govern- ment Size and Terms of Trade” Review of Economic Studi- es, 76(2):629-668.
• WB. (2012) World Development Indicators, (21.10.2012).
• Frankel, J. ve Cavallo, E.(2004) “Does openness to trade make countries more vulnerable to sudden stops, or less? Using gravity to establish causality” Faculty Research Working Papers Series, August.
• Garen, T.J. ve Kathleen, T. (2005) “Do more open economies have bigger governments? Another look” Jour- nal of Development Economics 77(2):533-551.
• Güler, E. (2012) “Geçiş Ekonomileri ve Yeni Kurum- sal Iktisat’ın Yeniden Yükselişi” Doğuş Üniversitesi Dergisi, 13(1):52-68.
• IMF (2012) “Transition economies: An IMF perspec- tive on progress and prospects” Erişim Tarihi: 20.11.2012, http://www.imf.org/external/np/exr/ib/2000/110300.htm.
• Islam, M.Q. (2004) “The Long Run Relationship between Openness and Government Size: Evidence from Bounds Test” Applied Economics, 36:995–1000.
• Jeanneney, S.G. ve Hua, P. (2000) “Economic Open- ness and Public Expenditure in China: A Regional Analy- sis” International conference, Greater China and the World Economy, http://www.karyiuwong.com/confer/ HK-CCC00/papers/hua.pdf, (15.7.2012)
• Kimakova, A. (2009) “Government Size and Open- ness Revisited: The Case of Financial Globalization” KYKLOS, 62(3):394–406.
• Kueh, J., Puah, S.C. ve Wong, C. (2008) “Bounds Estimation for Trade Openness and Government Ex- penditure Nexus of Asean-4 Countries” MPRA Paper No:12351.
• Liberati, P. (2006) “Trade Openness, Financial Open- ness and Government Size” http://www.dauphine.fr/glo- balisation/liberati.pdf, ( 12.9.2012,)
• Maddala, G.S. ve Wu, S. (1999) “A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test” Oxford Bulletin of Economics and Statistics, 61:631–652.
• Molana, H., Catia, M. ve Mara, V. (2004) “On The Casual Relationship between Trade-Openness and Go- vernment Size: Evidence from 23 OECD Countries” Leverhulme Centre for Research on Globalisation Econo- mic Policy, University of Nottingham
• Nooruddin, I. ve Simmons, J.W. (2009) “Openness, Uncertainty and Social Spending: Implications for the Globalization-Welfare State Debate” International Studies Quarterly, 53:841–866.
• Peacock, A. ve Wiseman, J. (1967) “The Growth of Public Expenditure in the United Kingdom” 2. Baskı, London, George AllenveUnwıx Ltd.
• Peev, E. ve Dennis C.M. (2012) “Democracy, Eco- nomic Freedom and Growth in Transition Economies” KYKLOS, 65(3):371–407.
• PWT (2012) “University of Pennyslvania World Tab- le” https://pwt.sas.upenn.edu/, 21.10.2012
• Ram, R. (2009) “Openness, Country Size and Go- vernment Size: Additional Evidence from a Large Cross- Country Panel” Journal of Public Economics, 93:213–218.
• Rodrik, D. (1998) “Why Do More Open Economies Have Bigger Governments?” Journal of Political Economy, 1-47.
• Rudra, N. ve Haggard, S. (2005) “Globalization, De- mocracy and Effective Welfare Spending in the Develo- ping World” Comparative Political Studies, 38(9):1015– 1049.
• Ruggie, J.G. (1982) “International Regimes, Transac- tions and Change: Embedded Liberalism in the Postwar Economic Order” International Organization, 36:379– 415.
• Sáenz, E., Marcela, S. ve Dolores, M.G. (2011) “Tra- de Openness and Public Expenditure: The Spanish Case” 1960–2000 Public Choice, 1-23.
• Uğur, A.A. ve Berna, B.İ. (2011) “Küreselleşme Sü- recinde Geçiş Ekonomilerinin Sosyo-Ekonomik Adaptas- yonu” Elektronik Sosyal Bilimler Dergisi, 10(38):158-174.