IDEAS home Printed from https://ideas.repec.org/a/jed/journl/v40y2015i1p113-136.html
   My bibliography  Save this article

Varieties Of Capitalism And Government Spending In Developed And Developing Countries

Author

Listed:
  • JOACHIM AHRENS

    (PFH Gottingen Private University of Applied Science, Germany)

  • RAINER SCHWEICKERT

    (Kiel Institute for the World Economy, Germany)

  • JULIANE ZENKER

    (University of Hannover, Germany)

Abstract

Empirical papers on the size of government suffer from neglecting preferences for government activity as discussed in the literature on varieties of capitalism. Cross-country evidence for a sample of 126 developed and developing countries reveals a global divide. Among developing countries, Asian countries are closer to continental European economies, i.e., they reveal relatively higher levels of spending dependent on the quality of governance. Latin American countries rather tend towards low-spending anglo-saxon economies and spend to stabilize rather than to fight inequality. Considering these preferences, we do not find evidence that open countries spend more in order to buffer macroeconomic risks.

Suggested Citation

  • Joachim Ahrens & Rainer Schweickert & Juliane Zenker, 2015. "Varieties Of Capitalism And Government Spending In Developed And Developing Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(1), pages 113-136, March.
    • Handle: RePEc:jed:journl:v:40:y:2015:i:1:p:113-136
    as

    Download full text from publisher

    File URL: http://www.jed.or.kr/full-text/40-1/5.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ram, Rati, 1987. "Wagner's Hypothesis in Time-Series and Cross-section Perspectives:," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 194-204, May.
    2. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    3. Brown, J. David & Earle, John S. & Gehlbach, Scott, 2009. "Helping Hand or Grabbing Hand? State Bureaucracy and Privatization Effectiveness," American Political Science Review, Cambridge University Press, vol. 103(2), pages 264-283, May.
    4. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
    5. Shelton, Cameron A., 2007. "The size and composition of government expenditure," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2230-2260, December.
    6. Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2014. "Societal Institutions and Tax Effort in Developing Countries," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 301-351, May.
    7. Hall, Peter A. & Gingerich, Daniel W., 2004. "Varieties of Capitalism and Institutional Complementarities in the Macroeconomy," MPIfG Discussion Paper 04/5, Max Planck Institute for the Study of Societies.
    8. Philippe Aghion & Peter Howitt, 2009. "The Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012634, April.
    9. Persson, Torsten & Tabellini, Guido, 1999. "The size and scope of government:: Comparative politics with rational politicians," European Economic Review, Elsevier, vol. 43(4-6), pages 699-735, April.
    10. Hans-Georg Petersen, 2008. "Integration, decentralization, taxation, and revenue sharing : good governance, sustainable fiscal policy and poverty reduction as peace-keeping strategies," Finanzwissenschaftliche Diskussionsbeiträge 57, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
    11. Clara Delavallade, 2006. "Corruption and distribution of public spending in developing countries," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 30(2), pages 222-239, June.
    12. Cameron, David R., 1978. "The Expansion of the Public Economy: A Comparative Analysis," American Political Science Review, Cambridge University Press, vol. 72(4), pages 1243-1261, December.
    13. Bird, Richard M., 2008. "Tax challenges facing developing countries," Working Papers 08/als1, National Institute of Public Finance and Policy.
    14. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422, October.
    15. Barry R. Weingast, 2005. "The Constitutional Dilemma of Economic Liberty," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 89-108, Summer.
    16. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    17. Mulligan Casey B & Gil Ricard & Sala-i-Martin Xavier X, 2010. "Social Security and Democracy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-46, March.
    18. Aghion, Philippe & Bacchetta, Philippe & Rancière, Romain & Rogoff, Kenneth, 2009. "Exchange rate volatility and productivity growth: The role of financial development," Journal of Monetary Economics, Elsevier, vol. 56(4), pages 494-513, May.
    19. Akitoby, Bernardin & Clements, Benedict & Gupta, Sanjeev & Inchauste, Gabriela, 2006. "Public spending, voracity, and Wagner's law in developing countries," European Journal of Political Economy, Elsevier, vol. 22(4), pages 908-924, December.
    20. Brautigam,Deborah & Fjeldstad,Odd-Helge & Moore,Mick (ed.), 2008. "Taxation and State-Building in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521716192, October.
    21. Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2014. "Societal Institutions and Tax Effort in Developing Countries," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 301-351, May.
    22. International Monetary Fund, 1990. "International Comparisons of Government Expenditure Revisited; The Developing Countries 1975-86: Occa Paper No.69," IMF Occasional Papers 1990/003, International Monetary Fund.
    23. Brautigam,Deborah & Fjeldstad,Odd-Helge & Moore,Mick (ed.), 2008. "Taxation and State-Building in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521888158, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ahlborn, Markus & Schweickert, Rainer, 2019. "Economic systems in developing countries – A macro cluster approach," Economic Systems, Elsevier, vol. 43(3).
    2. Joscha Beckmann & Rainer Schweickert & Markus Ahlborn & Inna Melnykovska, 2020. "Drivers of Government Activity in European Countries: Do Partisan Politics Still Divide East and West?," Journal of Common Market Studies, Wiley Blackwell, vol. 58(5), pages 1235-1251, September.
    3. Jordi A. Surroca & Ruth V. Aguilera & Kurt Desender & Josep A. Tribó, 2020. "Is managerial entrenchment always bad and corporate social responsibility always good? A cross‐national examination of their combined influence on shareholder value," Strategic Management Journal, Wiley Blackwell, vol. 41(5), pages 891-920, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ahrens, Joachim & Schweickert, Rainer & Zenker, Juliane, 2011. "Varieties of capitalism, governance and government spending: A cross-section analysis," PFH Forschungspapiere/Research Papers 2011/01, PFH Private University of Applied Sciences, Göttingen.
    2. Shelton, Cameron A., 2007. "The size and composition of government expenditure," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2230-2260, December.
    3. Shelton, Cameron A., 2008. "The aging population and the size of the welfare state: Is there a puzzle?," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 647-651, April.
    4. repec:idq:ictduk:13711 is not listed on IDEAS
    5. Fjeldstad, Odd-Helge, 2013. "Taxation and Development : A Review of Donor Support to Strengthen Tax Systems in Developing Countries," WIDER Working Paper Series 010, World Institute for Development Economic Research (UNU-WIDER).
    6. Marcus André Melo & Armando Barrientos & André Canuto Coelho, 2014. "Taxation, redistribution and the social contract in Brazil," Global Development Institute Working Paper Series iriba_wp11, GDI, The University of Manchester.
    7. Leanora Alecia Brown & Jorge Martinez-Vazquez, 2015. "International Debt Forgiveness: Who Gets Picked and Its Effect On The Tax Effort Of Developing Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1504, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    8. Jean-François Brun & Sèna Kimm Gnangnon, 2019. "Tax reform, public revenue and public revenue instability in developing countries: Does development aid matter?," CERDI Working papers halshs-02089734, HAL.
    9. Marina Dodlova, 2013. "Political Accountability and Real Authority of Government Bureaucracy," CESifo Working Paper Series 4443, CESifo.
    10. Jean-François Brun & Sèna Kimm Gnangnon, 2019. "Tax reform, public revenue and public revenue instability in developing countries: Does development aid matter?," Working Papers halshs-02089734, HAL.
    11. Abu S. Shonchoy, 2016. "Political Institutions, Governance, And Consumption Expenditure In Developing Countries: A Panel Data Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 34(4), pages 710-728, October.
    12. McCloud, Nadine & Delgado, Michael S. & Holmes, Chanit'a, 2018. "Does a stronger system of law and order constrain the effects of foreign direct investment on government size?," European Journal of Political Economy, Elsevier, vol. 55(C), pages 258-283.
    13. Suzanna-Maria Paleologou, 2016. "The long-run tendency of government expenditure: a semi-parametric modelling approach," Empirical Economics, Springer, vol. 50(3), pages 753-776, May.
    14. Dragan Tevdovski & Joana Madjoska & Petar Jolakoski & Branimir Jovanovic & Viktor Stojkoski, 2022. "Firm Profits and Government Activity: An Empirical Investigation," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 24(1), pages 43-82, June.
    15. Andersson, Jens & Lazuka, Volha, 2019. "Long-term drivers of taxation in francophone West Africa 1893–2010," World Development, Elsevier, vol. 114(C), pages 294-313.
    16. James B. Ang & Jakob B. Madsen, 2012. "Risk capital, private credit, and innovative production," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(4), pages 1608-1639, November.
    17. Oleg Badunenko & Daniel Henderson & Romain Houssa, 2014. "Significant drivers of growth in Africa," Journal of Productivity Analysis, Springer, vol. 42(3), pages 339-354, December.
    18. Kevin Williams, 2021. "Does national income mediate the relationship between trade and government size?," Empirical Economics, Springer, vol. 61(6), pages 3029-3057, December.
    19. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't The US Have a European-Style Welfare State?," Harvard Institute of Economic Research Working Papers 1933, Harvard - Institute of Economic Research.
    20. Rangan Gupta & Lardo Stander & Andrea Vaona, 2023. "Openness and growth: Is the relationship non‐linear?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 3071-3099, July.
    21. Quamrul Ashraf & Oded Galor, 2013. "The 'Out of Africa' Hypothesis, Human Genetic Diversity, and Comparative Economic Development," American Economic Review, American Economic Association, vol. 103(1), pages 1-46, February.

    More about this item

    Keywords

    Government Size; Political Governance; Economic Systems; Inequality; Openness; Developing Regions;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jed:journl:v:40:y:2015:i:1:p:113-136. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sung Y. Park (email available below). General contact details of provider: https://edirc.repec.org/data/eccaukr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.