Government size, Government quality and environmental quality Case study of OECD and OIC countries

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Abstract

Studying the relationship between government size and providing of public good by devising an empirical test that would provide information on the validity of the demand-driven theory against all of the remaining Theories which  explaining government size  seems important for assessing the welfare implications of government size .In this paper, we use a panel estimation method for  OECD and OIC  countries over the period 1995 -2008  to evaluate the theory of government as a public goods provider by studying the relationship between government size and the provision of a particular, public good, namely environmental quality. We have found that the government size has a negative effect on air quality but for government quality  this relation is inverse. That is, countries with a larger government size tend to suffer from higher levels of air pollution. This result suggests that besides the known factors  there are additional channels , corruption, bureaucratic, through which a large government may have harmful consequences for the environment.

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