Investigating the Impact of Globalization and Corruption on Government Size

The process of economic growth and development depends on the extent to which the national economy interacts with the world economy and is affected by the process of globalization. In this regard, the size of the government has also undergone a great deal of change in the approach of accepting engagement with the issue of globalization and with the anomaly itself has increased the possibility of corruption, especially in developing countries. The purpose of the present study was to investigate the impact of business-financial openness on government size by emphasizing the Corruption Perceptions Index and comparing it in two groups of high-income and low-income countries over the period 2018–2006 using panel data. It is based on the FGLS approach. The findings show that improving the perception index of corruption has led to an increase in the size of government in high-income countries, while in  low-income countries it has reduced the size of government presence in the economy. Moreover, financial freedom has had a greater impact on government size in high-income countries than commercial freedom, and has resulted in a decrease in the size of government, while commercial freedom has no such effect. In the group of low-income countries, improving the perception of corruption, which indicates improved governance quality, has led to a decrease in the size of governments, but the effect of commercial and financial freedom on the size of the positive government reflects the increasing impact of globalization indicators on The size of the government. The findings indicate the asymmetric impact of commercial and financial freedom on government size in high-income countries. In spite of the asymmetric response of the government size in the two income groups to the perception of corruption index, the improvement in this index in the group of low-income countries has been associated with a larger response to the decline in government volume.