Globalization, Democracy and Size of Government: Testing for Efficiency and Compensation Hypotheses for Nigeria
The relationship between globalization and government size is examined under the efficiency and compensation hypotheses in the literature. This study tested the extent to which the compensation effect, as hypothesized for developed nations, is able to explain the relationship between globalization and public spending in Nigeria. It also investigate the role of democratic regime in the globalization-government size nexus. The study employed a new globalization index as a measure of globalization adapted from the KOF index proposed by Dreher (2006) and revised by Gygli, Haelg, Potrafke, & Sturm (2018).Using annual dataset covering the period 1970-2017, the study applied OLS with heteroscedasticity-robust standard errors as estimation technique.Using economic and overall index of globalization, the study favours the compensation hypothesis while social globalization and government size nexus supports the efficiency hypothesis.
Keywords - Globalization, Democracy, Government Size