The impact of Government spending on economic growth in D-8 countries

The present paper examines the effect of government consumption expenditures on economic growth in D-8 countries during the period of 1988 to 2010 using the panel data method. Iran, Turkey, Indonesia, Bangladesh, Nigeria, Egypt, Pakistan and Malaysia are the countries that have been researched in this study. Fixed effect method is used for the model estimation that has been acquired from Lizardo and Mollick (2009). According to the obtained results; increasing the government consumption expenditures has a negative impact on economic growth in D-8 countries. On the other hand, the results indicate a negative impact of inflation and a positive impact of investment on economic growth of these countries. Also based on the results, the size of government in D-8 economies was more than optimal size confirming the existence of Armeyi phenomenon in these countries. Create a favorable environment for the reduction of government consumption expenditures and increasing investment in D-8 countries appears to be essential.