Impact of Government on Growth and Trade

23 Pages Posted: 28 May 2004 Last revised: 10 Sep 2010

See all articles by Anne O. Krueger

Anne O. Krueger

International Monetary Fund (IMF); Stanford University - Graduate School of Business; National Bureau of Economic Research (NBER)

David Orsmand


Date Written: December 1990


In this paper we attempt to test the development economist's perceptions of the negative contributions of governmental activities, as well as the positive contributions of other activities, to growth. This paper provides evidence on the importance of government behavior for economic growth and, in so doing, attempts to start building a bridge between the development economics literature and the new growth theory. The focal point is the recognition that governments do more than spend and tax in manners that maximize social welfare functions: they influence incentives and regulate in ways that affect private behavior, and their spending, even on infrastructure, is not always optimal.

Suggested Citation

Krueger, Anne O. and Orsmand, David, Impact of Government on Growth and Trade (December 1990). NBER Working Paper No. w3545, Available at SSRN:

Anne O. Krueger (Contact Author)

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David Orsmand


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