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Government Control and Economic Growth in Asia: Evidence from Time Series Data

  • Zaidi Sattar

    (University of Pennsylvania, Shippensburg, Pennsylvania, USA.)

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    Government control of the economy varies widely, in degree as well as effectiveness, across countries and continents. The LDCs of Asia have generally opted for planned development and a large public sector, giving their governments significant control over their economies. The Newly Industrialising Countries (NICs) of Asia, on die other hand, have thrived on economic liberalisation and greater market orientation. The growth record of the Asian LDCs during the past decade appears pitiful as compared to that of the high-growth NICs. The present study attempts to empirically reassess the nature of the government's linkage with growth and productivity in Asian LDCs. The study finds evidence of a significant linkage between government and growth in developing Asia, but not in die NICs or eight of die leading market economies of die world. Empirical evidence from the present study suggests that excessive government control in die Asian LDCs might have bred inefficiency, though not so much as to retard economic growth. On balance, governmental impact on these economies remains significantly positive.

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    File URL: http://www.pide.org.pk/pdf/PDR/1993/Volume2/179-197.pdf
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    Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

    Volume (Year): 32 (1993)
    Issue (Month): 2 ()
    Pages: 179-197

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    Handle: RePEc:pid:journl:v:32:y:1993:i:2:p:179-197
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    1. Landau, Daniel, 1986. "Government and Economic Growth in the Less Developed Countries: An Empirical Study for 1960-1980," Economic Development and Cultural Change, University of Chicago Press, vol. 35(1), pages 35-75, October.
    2. Nakamura, Alice & Nakamura, Masao, 1981. "On the Relationships among Several Specification Error Tests Presented by Durbin, Wu, and Hausman," Econometrica, Econometric Society, vol. 49(6), pages 1583-88, November.
    3. Balassa, Bela, 1988. "The Lessons of East Asian Development: An Overview," Economic Development and Cultural Change, University of Chicago Press, vol. 36(3), pages S273-90, Supplemen.
    4. Ram, Rati, 1986. "Government Size and Economic Growth: A New Framework and Some Evidencefrom Cross-Section and Time-Series Data," American Economic Review, American Economic Association, vol. 76(1), pages 191-203, March.
    5. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    6. Daniel Landau, 1985. "Government expenditure and economic growth in the developed countries: 1952–76," Public Choice, Springer, vol. 47(3), pages 459-477, January.
    7. Robinson, Sherman, 1971. "Sources of Growth in Less Developed Countries: A Cross-Section Study," The Quarterly Journal of Economics, MIT Press, vol. 85(3), pages 391-408, August.
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