Does too much government investment retard economic development of a country?

Author: Yavas Abdullah  

Publisher: Emerald Group Publishing Ltd

ISSN: 0144-3585

Source: Journal of Economic Studies, Vol.25, Iss.4, 1998-04, pp. : 296-308

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Abstract

The purpose of this paper is to understand how the effect of the government size per capita on the steady-state level of output and on the growth rate differs between LDC's and developed countries. It is shown that an increase in government size will increase the steady-state level of output if the economy is at a low steady-state (underdeveloped), and will decrease the steady-state level of output if the economy is at a high steady-state (developed).