Investigating the Relationship between Trade Openness and Government Size for Selected South Asian Countries

Abstract

An essential assumption in the study is that trade openness creates external risk and government increases its expenditures for social protection against externally generated instability. When there are efficient bureaucrats, the size of government reduces to increase the trade openness. Trade openness creates volatility and bureaucratic efficiency may undercut the government consumption. Thus, the government addresses different challenges more efficiently and less costly due to efficient bureaucracy. This paper makes available the empirical evidence of the relationship between trade openness, bureaucratic efficiency and government size