Governmental Intervention and Its Impact on Growth, Economic Development, and Technology in OECD Countries

Abstract

The governments’ intervention in the economy impacts technological performance and sustainability. This role has become even more critical due to the COVID-19 situation and in the context of the continuous increase in resource consumption, which requires finding alternative solutions. We provide a comprehensive literature review about the state’s economic functions, redistribution of resources in society, and the role of state intervention in sustainability-related issues, giving a full description of the opinions and concepts primarily of economists. We propose to study governments’ interventions in their economy using budgetary resources on public expenditure, highlighting the leading factors in government policies using a suggested intervention index. The state’s intervention policy’s stability is measured via the intervention index’s partial autocorrelation function over the years. We collected data from OECD data sets and conducted a descriptive statistical analysis followed by panel data analysis. Subsequently, two questions are explored about the state’s intervention and its technical performance and technology-related sustainability issues. Results show that economic strength positively affects the intervention. Expenditures on education may lead to better technological outcomes, unlike expenses on health. The tax burden inhibits innovation and technological progress, but total governmental revenues positively affect technological performance.

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