Date of Award:

5-1998

Document Type:

Dissertation

Degree Name:

Doctor of Philosophy (PhD)

Department:

Economics and Finance

Department name when degree awarded

Economics

Committee Chair(s)

Basudeb Biswas

Committee

Basudeb Biswas

Committee

Donald L. Snyder

Committee

Christopher Fawson

Committee

Philip R. Swensen

Committee

L. Dwight Israelsen

Abstract

In this dissertation, we provide empirical assessment of government involvement in economic activities. This assessment is done within the framework of a two-part strategy. In the first part, we evaluate the effects of the government size on the overall rate of economic growth of a group of 30 developing countries. This approach can be regarded as macroeconomic in the sense that the economywide growth is the subject of investigation. In the second part, we conducted a comparative study of technical efficiency between privately owned and publicly owned companies in the international oil industry. We refer to this approach as microeconomic since a particular industry is under investigation.

this dissertation consists of two essays. In the first essay, we examine the effect of government size, measured by the ratio of government consumption expenditures to gross domestic product (GDP) on the rate growth of GDP. Our sample includes 30 low-income and middle-income developing countries over the period 1970-90. We use a panel data approach to avoid the shortcomings of the cross-country models often used in such an analysis. The results indicate government size has a highly significant negative influence on the rate of economic growth. Therefore, privatization is viewed as a structural adjustment policy to overcome the negative effects of government size. However, we emphasize this policy can be effective only in the proper environment in a market-oriented economy with well-established political, social, and economic institutions, and a well-defined property right system. The essay provides some empirical evidence from a group of countries about the impact of privatization on the rate of economic growth.

In the second essay, we measure the firm-specific technical efficiency for a sample of 44 publicly owned and privately owned petroleum companies in the international oil industry. The empirical investigation is carried out by using the stochastic frontier production function approach. The results indicate the private decision-making units in the oil industry overperformed their publicly owned counterparts in terms of technical efficiency. The implication is privatization can improve the performance of the transformed public enterprises.

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