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Public Spending, Political Structure and Growth: Evidence for the Middle East and North Africa from an International Perspective

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  • Hamid Mohtadi

    (Economics Department, University of Wisconsin-Milwaukee)

Abstract

Based on an endogenous model in which government spending responds to lobbying, the effects of spending on growth depend on the size of public 'spillovers' relative to lobbying. The spillover effects are small and lobbying effects large in less democratic societies as informational 'asymmetries' facilitate purely rent-seeking activities. Thus, the growth effects of government spending are fewer the less democratic societies are. Cross-sectional evidence supports this hypothesis in two different samples, when MENA countries are included. Focusing on the MENA group, a larger impact of government spending on growth is found, relative to other developing economies, but not relative to industrial economies. Among the MENA countries evidence partly supports this democracy hypothesis.

Suggested Citation

  • Hamid Mohtadi, 1995. "Public Spending, Political Structure and Growth: Evidence for the Middle East and North Africa from an International Perspective," Working Papers 9506, Economic Research Forum, revised 03 Sep 1995.
    • Handle: RePEc:erg:wpaper:9506
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    Cited by:

    1. Jie Wu & Malin Song & Li Yang, 2015. "Advances in energy and environmental issues in China: theory, models, and applications," Annals of Operations Research, Springer, vol. 228(1), pages 1-8, May.

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