The Impact of Government Quality and Public Sector Size on Economic Growth in Turkic Republics: An Empirical Analysis

Abstract

The aim of this paper is to investigate the effects of public sector size and quality of government on economic growth for seven Turkic Republics, including Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Turkmenistan, Uzbekistan. It used panel seemingly unrelated regression (SUR) approach for analyzing relationships between variables during the period 2002-2015. According to the obtained results, quality of government in Turkey, Azerbaijan, Kazakhistan, and Uzbekistan has a statistically significant and positive effect on economic growth while it has statistically insignificant effect in Kyrgyzstan, Turkmenistan, and Tajikistan. On the other hand, public sector size has positive effect on economic growth in other Turkic Republics while the impact of public sector size on economic growth is negative in only Turkey. In Turkic Republics, it can be claimed, therefore, that process of the transition to market economy and sustainable growth are run together with transformation of state. More specifically, healthier state-market harmony supports reforms applied in enhancing quality of government for the findings of Turkey.