Exploring the Relationship between Corruption and Government Size in Türkiye: Does Globalization Matter?

Economic crises, pandemics, environmental degradation, and geopolitical conflicts have led to major transformations in public finance policies over the years. In particular, government interventionism associated with the welfare state has become a defining element of public policies in many countries. However, the continuous increase in government expenditures has challenged budget sustainability. The significant influence of political, institutional, and global factors on expenditure levels has revealed a trade-off between efficiency and intervention. In the presence of political corruption, such interventions often shift from being a necessity to becoming rent-seeking activities, leading to an inefficient expansion of government size. On the other hand, globalization exerts a substantial impact on both the size and the institutional structure of the public sector. This study focuses on the relationship among corruption, globalization, and government size in Türkiye. It is based on the idea that globalization may affect not only government size directly but also the relationship between corruption and government size. Within this framework, the dynamics among the variables have been examined for the period 1970–2019 using the Autoregressive Distributed Lag (ARDL) approach. The findings indicate that while corruption increases government size, globalization reduces it significantly. Moreover, globalization has a moderating effect that significantly weakens the statistical relationship between corruption and government size.