The Influence of Political and Economic Institutions on Economic Growth in Petroleum Countries Based on Government Size (Game Theory Approach)

Document Type : Scientific paper

Authors

1 PhD student of International Economics, Islamic Azad University Isfahan (Khorasgan) Branch, Isfahan, Iran.

2 Professor, Department of Economics, University of Isfahan. Isfahan, Iran

3 Assistant professor, Islamic Azad University of Khomeinishahr Branch, Isfahan< Iran

Abstract

The issue of economic growth and identifying factors affect it has always been one of the interesting topics to economists. Extensive studies have identified the role of several factors in economic growth, but in modern models, these factors are function of incentives in societies. In these studies, the incentives that drive or slow economic growth attributes to the different political and economic institutions on those societies. This article by using game theory approach and designing different scenarios, will evaluate the different incentives that can influence the choice of size of government’s policy in the oil countries. At first, elites who seek to maximize government revenue intend to set a government size to maximize the production of middle-class entrepreneurs. Assuming that the government is active in economic activities, elites tend to increase the size of government. If the competition extend to the political arena, the motivation of the elites was strongly influenced, which would result in a larger government than previous scenarios and further weaken economic growth.

Keywords

References

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Macroeconomics Research Letter
Volume 15, Issue 29
August 2020
Pages 39-71

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History

  • Receive Date: 16 October 2019
  • Revise Date: 18 January 2020
  • Accept Date: 22 June 2020

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