Openness and Government Size: Evidence from Sub-Saharan African Countries

Abstract

Over the years, African countries have implemented various economic liberalization reforms. The impact of such policy reforms on government size has remained a contentious issue in the literature. Thus, this study examined the relationship between openness and government size in Sub-Saharan African countries. The study covered twenty-one African countries over the period 2001 to 2019. Specifically, the study examined the validity of the compensation and efficiency hypotheses with respect to Sub-Saharan African countries. The findings of the study did not support the existence of both the compensation and the efficiency hypotheses. Also, it was observed that financial openness had an insignificant influence on the relationship between trade openness and government size in Sub-Saharan African countries. Thus, the study concludes that the compensated and the efficiency hypotheses do not hold with respect to Sub-Saharan African countries.