Business and Economic Horizons

  Previous Article | Back to Volume | Next Article
  Abstract | References | Citation | Download | Preview | Statistics
Volume 10
Issue 2
Online publication date 2014-07-16
Title The productivity of public and private sector in Poland
Author Robert Pater, Tomasz Skica
In the article a concept of comparing public and private sector effectiveness is presented. It is based on an analysis of the productivity of capital and labour in both sectors. For this purpose, the authors build growth model in the general and intensive form, taking into account public and private sectors and their relationships in terms of gross value of fixed assets, and employment. Empirical analysis is carried out using a panel model for Polish provinces in the years 2002-2009. The analysis show that the size of the public sector in terms of labour and capital is negatively correlated with Gross Domestic Product and gross value added per employee. Research has shown that the productivity in the two sectors is different. The private sector has a higher productivity of both labour and capital in comparison to the public sector. The authors are of the opinion that the analysis in terms of labour and capital in both sectors substantially complements the more common approach aimed at measuring the effectiveness of public sector from the point of view of expenditures. Proposed analysis has the advantage that it expresses two sectors, which use different accounting categories, in the same economic terms – productivity.


Afonso, A., Schuknecht, L., Tanzi, V., 2005. Public Sector Efficiency: An International Comparison", Public Choice, 123, pp. 321-347. Afonso, A., João T. J., 2011. Economic Performance and Government Size", EBC Working Paper no.21
Alesina, A., Devleeschauwer A., Easterly, W., Kurlat, S, Wacziarg, R., Fractionalization", 2003. Journal of Economic Growth, 2, pp. 155-194. Alesina, A., Ardagna, S., 2009. Large Changes in Fiscal Policy: Taxes Versus Spending", NBER Working Paper Ser no. 15438
Alexander, W.R.J., 1990. Growth: Some combined cross-sectional and time series evidence from OECD countries", American Economic Journals: Applied Economics, 22, pp.1197–1204
Arellano, M., 2003. Panel Data Econometrics, Oxford University Press, Oxford.
Bajo-Rubio, O., 2000. A further generalization of the Solow growth model: the role of the public sector", Economic Letters, 68, pp. 79-84. Barro, R.J., 1989. A cross-country study of growth, saving, and government", NBER Working Paper Series no. 2855.
Barro, R.J., 1991. Economic growth in a cross section of countries", Quarterly Journal of Economics, 106, pp. 407–444. Barth, J.R., Bradley M., 1988. The impact of government spending on economic activity", Unpublished. The National Chamber Foundation, Washington
Baumol, W.J., 1967. Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis", American Economic Review, 3, pp. 415-426. Benson B.L., Johnson R.N., 1986. The Lagged Impact of State and Local Taxes on Economic Activity and Political Behavior", Economic Inquiry, 6, pp. 389-401
Besci, Z., 1996. Do State and Local Taxes Affect Relative State Growth?", Economic Review, 2, pp. 18–35. Bose, N., Haque, M.E., Osborn, D.R., 2003. Public Expenditure and Growth in Developing Countries: Education is the Key", Centre for Growth and Business Cycle Research Discussion Paper Series No. 80.
Chobanov, D., Mladenova, A., 2009. What Is the Optimum Size of Government", Institute for Market Economics Working Paper. Conte, M.A., Darrat A.F., 1988. Economic growth and the expanding public sector: A reexamination", Review of Economic Statistics, 70, pp.322–330
Dar, A.A., Amirkhalkhali, S., 2002. Government size, factor accumulation, and economic growth: evidence form OECD countries", Journal of Policy Modeling, 24, pp. 679-692. De Witte, K., Moesen, W., 2010. Sizing the government", Public Choice, 145, pp.39-55
Diewert, W.E., 2011. Measuring productivity in the public sector: some conceptual problems", Journal of Productivity Analysis, 36, pp. 177–191. Dilrukshini, W.A. 2002. Public Expenditure and Economic Growth: Cointegration Analysis and Causality Testing", Central Bank of Sri Lanka Staff Studies, 34, pp.51-68
Doornik, J.A., Hansen, D., 1994. An omnibus test for univariate and multivariate normality", Nuffield College Working Paper. Easterly W., Rebelo, S., 1993. Fiscal policy and economic growth: An empirical investigation", Journal of Monetary Economics, 32, pp.417–458
Engen, E.M., Skinner, J., 1992. Fiscal policy and economic growth", NBER Working Paper Series no. 4223. Fölster, S., Henrekson, F., 2001. Growth effects of government expenditure and taxation in rich countries", European Economic Review, 45, pp.1501-1520
Grier, K., Tullock, G., 1989. An empirical analysis of cross-national economic growth", 1951-1980, Journal of Monetary Economics, 24, pp. 48-69. Gupta, S., 2001. Transition Economies: How Appropriate Is the Size and Scope of Government?", IMF Working Paper Series, no.55
Guseh, J. S., 1997. Government size and economic growth in developing countries: a political-economy framework", Journal of Macroeconimics, 19, pp. 175-192. Gwartney, J., Holcombe, R., Lawson, R., 1998. The scope of government and the wealth of nations", Cato Journal, no.18
Hansson P., Henrekson, M., 1994. A new framework for testing the effect of government spending on growth and productivity", Public Choice, 81, pp. 381–401. Hausman, J., Taylor, W., 1981. A generalized specification test", Economic Letters, 8, pp.239–45
Heitger, B., 2001. The Scope of Government and Its Impact on Economic Growth in OECD Countries", Kiel Working Paper, no. 1034. Jiranyakul K., Brahmasrene T., 2007. The Relationship Between Government Expenditure and Economic Growth in Thailand", Journal of Economics and Economic Education Research, 1, pp.93-103
Josheski D., Lazarov D., Koteski C., 2011. Analysis of the optimal size of the government consumption", MPRA Paper no. 32983. Katz C.J., Mahler V.A., Franz M.G., 1983. The impact of taxes on growth and distribution in developed capitalist countries: A cross-national study", Americal Polital Science Review, 77, pp. 871–886.
Koester R.B., Kormendi R.C., 1989. Taxation, aggregate activity and economic growth: Cross-country evidence on some supply-side hypotheses", Economic Inquiry, 27, pp. 367–386. Korpi W., 1985. Economic growth and the welfare system: Leaky bucket or irrigation system?", European Sociology Review, 1, pp.97–118
Kustepeli Y., 2005. The Relationship Between Government Size and Economic Growth: Evidence From a Panel Data Analysis", Dokuz Eylül University Department of Economics Discussion Paper Series no. 06. Landau D., 1983. Government expenditure and economic growth: A cross-country study", Southern Economic Journal, 49, pp.783–792
Levine R., Renelt D., 1992. A sensitivity analysis of cross-country growth regressions", American Economic Review, 82, pp. 942–963. Levine R., Zervos S.J., 1993. What we have learned about policy and growth from cross-country regressions", American Economic Review, 83, pp.426–430
Lin S.A.Y., 1994. Government spending and economic growth", Applied Economics, 26, pp. 83–94,
Magazzino C., 2008. Modelli interpretativi della dinamica della spesa pubblica e "curva di Armey": ilcasoitaliano", 1862-2001, Notizie di Politeia, 92, pp. 45-60. Magazzino C., Forte F., 2010. Optimal size of government and economic growth in EU-27", MPRA Paper no. 26669
Marlow M.L., 1986. Private sector shrinkage and the growth of industrialized economies", Public Choice, 49, pp. 143–154. Nerlove M., 1999. Properties of Alternative Estimators of Dynamic Panel Models: An Empirical Analysis of Cross-Country Data for the Study of Economic Growth, in: Hsiao C., Lahiri K., Lee L.F. and Pesaran M. H. (Eds.), Analysis of Panels and Limited Dependent Variable Models", Cambridge University Press, Cambridge
Olukayode M. E., 2009. Does Government Spending Spur Economic Growth in Nigeria?", MPRA Paper no. 17941. Peden E.A., Bradley M.D., 1989. Government size, productivity and economic growth: The post war experience", Public Choice, 3, pp.229-245
Pevcin P., 2003. Does Optimal Size Of Government Spending Exist?", University of Ljubljana, typewritten. Pevcin P., 2004. Economic Output and the Optimal Size of Government", Economic and Business Review, 3, pp.213-227
Pevcin P., 2008. The Issue Of The Economically Preferred Size Of Government", E.A.B.R. & T.L.C. Conference Proceedings, Salzburg. Poulson B.W., Kaplan J.G., 2008. State Income Taxes and Economic Growth", Cato Journal, no.1
Rahn R., Fox H., 1996. What Is the Optimum Size of Government", Vernon K. Krieble Foundation. Ram R., 1986. Government size and economic growth: A new framework and some evidence from cross-section and time-series data", American Economic Review, 76, pp.191–203.
Reinhart C.M., Rogoff K.S., 2010. Growth in a Time of Debt", American Economic Review, no. 5. Scully G.W., 1994. What Is the Optimal Size of Government in the United States?", National Center for Policy Analysis Policy Report, no.188
Scully G.W., 1998. Measuring the Burden of High Taxes", National Centre for Policy Analysis Policy Report, no. 215. Scully G.W., 2000. The Growth-Maximizing Tax Rate", Pacific Economic Review, no.5
Scully G.W., 2002. Economic Freedom, Government Policy and the Trade-Off Between Equity and Economic Growth", Public Choice, 113, pp. 77-96. Scully G.W., 2003. Optimal taxation, economic growth and income inequality", Public Choice, 115, pp.299-312,
Smith D., 1975. Public consumption and economic performance", National Westminster Bank Quarterly Review, 11, pp. 17–30. Spann, R.M., 1977. The macroeconomics of unbalanced growth and the expanding public sector: Some simple tests of a model of government growth", Journal of Public Economics, 3, pp. 397-404
Swamy P.A.V.B., Arora S.S., 1972. The Exact Finite Sample Properties of the Estimators of Coefficients in the Error Components Regression Models", Econometrica, 40, pp. 261–75. Torstensson J., 1994. Property rights and economic growth", Kyklos, 47, pp.231–47
Yavas A., 1998. Does too much government investment retard economic development of a country", Journal of Economic Studies, 4, pp.296–308,
Keywords Public sector, Productivity, Growth model, NTS-2 region.
Pages 120-137
Download Full PDF Download
  Previous Article | Back to Volume | Next Article
Search in articles
Journal Published articles
BEH 626
Journal Hits
BEH 1586296
Journal Downloads
BEH 48313
Total users online -