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A regional analysis of openness and government size

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  • Frank Balle
  • Ashish Vaidya

Abstract

The effects of international trade have been studied primarily from the perspective of a nation, often overlooking the more direct effects that occur on a regional or state level. Studies have illustrated the relationship between international trade and openness to the size of a nation's government as well as to specific categories of government spending. Because the United States retains strong state governments it is important to correlate openness with government size at the state level. The purpose of this paper is to ascertain whether increased state openness has resulted in state governments responding to the increased international trade activity by offering greater social protection. It is found that both public welfare and health services expenditures are positively correlated with the level of a state's openness. This suggests that US states have had to respond to the adverse effects of increased international trade activity.

Suggested Citation

  • Frank Balle & Ashish Vaidya, 2002. "A regional analysis of openness and government size," Applied Economics Letters, Taylor & Francis Journals, vol. 9(5), pages 289-292.
  • Handle: RePEc:taf:apeclt:v:9:y:2002:i:5:p:289-292
    DOI: 10.1080/13504850110067450
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    References listed on IDEAS

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    1. R. E. Baldwin & G. G. Cain, "undated". "Shifts in U.S. Relative Wages: The Role of Trade, Technology, and Factor Endowments," Institute for Research on Poverty Discussion Papers 1132-97, University of Wisconsin Institute for Research on Poverty.
    2. Dani Rodrik, 1997. "Has Globalization Gone Too Far?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 57.
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    Cited by:

    1. Rene Cabral Torres, 2012. "Capital and Labor Mobility and the Size of Sub-national Governments: Evidence from a Panel of Mexican States," CID Working Papers 231, Center for International Development at Harvard University.
    2. Daehaeng Kim & Chul-In Lee, 2007. "Government Size and Intersectoral Income Fluctuation; An International Panel Analysis," IMF Working Papers 07/93, International Monetary Fund.
    3. Gao Liu & Rui Sun, 2016. "Economic Openness and Subnational Borrowing," Public Budgeting & Finance, Wiley Blackwell, vol. 36(2), pages 45-69, June.
    4. Estela Sáenz & Marcela Sabaté & M. Gadea, 2013. "Trade openness and public expenditure. The Spanish case, 1960–2000," Public Choice, Springer, vol. 154(3), pages 173-195, March.
    5. Estela Sáenz Rodríguez & Marcela Sabaté Sort & Mª. Dolores Gadea Rivas, 2011. "¿Condiciona la apertura exterior el tamaño del sector público? Un panorama," Hacienda Pública Española, IEF, vol. 198(3), pages 131-149, September.
    6. Kueh, Jerome Swee-Hui & Puah, Chin-Hong & Wong, Chiew-Meu, 2008. "Bounds Estimation for Trade Openness and Government Expenditure Nexus of ASEAN-4 Countries," MPRA Paper 12351, University Library of Munich, Germany.
    7. Gemmell, Norman & Kneller, Richard & Sanz, Ismael, 2008. "Foreign investment, international trade and the size and structure of public expenditures," European Journal of Political Economy, Elsevier, vol. 24(1), pages 151-171, March.

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