Economic Reforms in SAARC Countries presents a cross-country comparison of development indicators in the SAARC countries with respect to the recent Liberalization, Privatization and Globalization (LPG). Presenting an empirical analysis, the book brings in the theoretical background relating to the growth of public expenditure as articulated by Adolf Wagner and other researchers in the 19th and early 20th centuries along with the Displacement Effect Hypothesis as advanced by Peacock and Wiseman in the mid-20th century. This book re-examines these theories and the views of researchers with respect to the changes in economic policies and studies the relevance of these in the present context. The book re-interprets the theories in the light of the impact of policy changes with time series analysis highlighting the changes in the structure of the estimated equation using dummy variables. The book discusses the differential growth of a few macro-economic variables in the SAARC countries with respect to time in the pre- and post-LPG period. It examines the determinants of development indicators in the post-LPG period identifying the most important determinants.
Chapter 5: Determinants of Development Indicators in the Post-LPG Era*
Determinants of Development Indicators in the Post-LPG Era*
In the preceding chapter, the impact of LPG on the growth of a few development indicators as a function of time has been highlighted. A dummy variable approach has been attempted in the said chapter where the trend analysis with a dummy time was analysed. As discussed in the said chapter, the objective was in the line of Wagner's Law of increasing state activities reflected in the growth of public expenditure over a long period. While analysing these aspects, not only the long-term public expenditure but also the indicators like GDP, GDP per capita and national expenditure as a percentage of GDP have been analysed.
It was observed that the ...