An Investigation of the Impact of Government Size on Economic Growth: New Evidence from Selected MENA Countries

Abstract

This paper investigates the impact of government size on economic growth in selected economies of the MENA countries by using a non-linear panel data approach over the period 1990-2011. The estimation results of Panel Smooth Threshold Regression model show that when the level of government consumption is very large, the positive impact of labor force on growth is intensified. On the other hand, export revenues in the countries under investigation have no positive effect on economic growth when the level of government consumption is high. The main result of this study confirms the negative impact of consumption expenditures on economic growth in this block of countries.