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The Effect of Government on Economic Growth in Fiji

Author

Listed:
  • D. P. Doessel

    (Queensland Centre for Mental Health Research, Department of Psychiatry, The University of Queensland, Australia)

  • Abbas Valadkhani

    (School of Economics and Finance, Queensland University of Technology, Australia)

Abstract

This paper investigates the empirical relationship between the size of government and the process of economic growth in Fiji. The results reported here present a mixed picture, in that the model estimated specifies two different effects of the government sector on economic growth. Using annual time series data for the period 1964–1999, it is found that government expenditure exerts a strong beneficial impact on economic growth. However, marginal factor productivity in the government sector is found to be lower than that of the private sector. The reasons for this low productivity are two-fold: the result of the lack of market incentives and signals in the public sector and the involvement of Fiji's government in some activities which may be rationalised in terms of the socio-political objectives of the Fijian government. While recognising that there may be factors which may hinder the process of efficiency in the private sector, it can be argued that by shifting factors of production from the low productivity (government) sector to the high productivity (private) sector, the rate of growth of GNP will increase.

Suggested Citation

  • D. P. Doessel & Abbas Valadkhani, 2003. "The Effect of Government on Economic Growth in Fiji," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 48(01), pages 27-38.
    • Handle: RePEc:wsi:serxxx:v:48:y:2003:i:01:n:s0217590803000608
    DOI: 10.1142/S0217590803000608
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    Cited by:

    1. Abdulaziz H. Algaeed, 2022. "Government Spending Volatility and Real Economic Growth: Evidence From a Major Oil Producing Country, Saudi Arabia, 1970 to 2018," SAGE Open, , vol. 12(2), pages 21582440221, April.
    2. Hafiz Saqib Mehmood Najmi & Farrukh Bashir & Saman Maqsood, 2013. "Is Fiscal Policy Effective In Generating Higher Real Output? A Case Of Pakistan," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 1(2), pages 47-58, December.

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