Test evidence for the OECD countries, 1965-85

Examines empirically the proposition that a large public enterprise sector for an economy acts as an obstacle to a healthy rate of economic growth. The empirical analysis concentrates on the experience of the OECD countries for the years 1965-85. Single and multiple equation-models of economic growth are specified with the size of the public enterprise (PE) sector included as an explanatory variable. In general, the evidence fails to support the hypothesis of a negative relationship between PE and economic growth.