The relationship between the size of public sector and the rate of economic growth has been widely examined empirically in different countries. Most applied studies confirmed the validity of the inverse relationship between the increasing role of the state in the economy, measured by the ratio of public spending to gross domestic product and rates of economic growth. These studies estimated the optimum rate that would guarantee achieving the highest economic growth rates. This study aims to analyses this relationship for the case of the Jordanian economy. Using a theoretically justified econometric model, the researchers have utilized an ARDL econometric technique to quantitatively assess this relationship for the period (1970-2018). The study relied on official data related to the gross domestic product published by the Central Bank of Jordan and official data related to public spending and public revenues published by the Jordanian Ministry of Finance. The econometric results of the study confirm the existence of an inverse relationship between the size of public sector and the rate of economic growth in Jordan, which may lend support to the hypothesis of the Armey curve. The optimal size of the government (public sector) is estimated to be about 26 percent, which is much lower than the actual average government size in Jordan. The researchers recommend the need to gradually cutting down the size of public sector through adjusting the real spending structure and restructuring the independent public institutions. The restructuring of independent public institutions requires the abolition of institutions that are not economically feasible and constitute more financial burdens on society on the one hand, and the merging of a number of them into an independent public institution that provides its services to the community in an efficient and effective manner. Researchers also recommend the need to continue privatizing the public sector and activating the role of partnership between the public and private sectors. Keywords: size of public sector, government spending, economic growth, ARDL, privatization.
This paper aims at exploring the main determinants of economic growth in Oil-Exporting Arab countries (OEAC) by shedding light on the most effective determinants. It is then wished that governments and policy makers would concentrate on and take them into consideration when they are designing and applying their public policies. The study used panel data for six OEAC over the period of 1998-2017. Some study variables were not stationary at level but they became stationary after taking the first difference for them. The result of applying panel Pedroni cointegration test revealed that the model was cointegrated. Therefore, FMOLS model was applied for estimation showing that gross fixed capital formation, labor force growth rate, economic freedom, rule of law, regulatory quality and government effectiveness have statistically significant positive impact on the economic growth of OEAC, while trade openness, control of corruption, political stability and voice and accountability have insignificant effects on their economic growth during the study period. Moreover, the Global Financial Crisis of 2008 with its slow recovery has a significant negative impact on the economic growth of such countries. Therefore, the study recommends OEACs' governments to make "real" institutional reforms and adopt the appropriate polices that eliminate corruption and rent seeking behaviour and enhance the rule of law. They also need to improve the quality of education and to develop the skills and expertise of their labour force. In addition, they have to establish specialization in the production of goods in which they have comparative advantages and diversify their production and sources of national income, and not to depend only on exporting natural raw materials, which altogether eventually ensure resources are efficiently and effectively utilized in pursuit of their economic growth and social development.
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