ECONOMIC GROWTH DETERMINANTS AND PUBLIC ADMINISTRATION INSTITUTIONS A Cross-National Analysis of TFP, AP and Weberianess

Abstract

The Weberian bureaucracy argument emphasizes a public administration with a set of principles on how it is organised, to make the bureaucracy more productive. This in turn means a more productive public sector. Due to the interconnected nature of the public and private sectors, improved public sector productivity also improves private sector productivity. Both the public and private sector productivities make up an economy's overall macroeconomic productivity. The result is enhanced economic growth. Based on this theoretical claim and using prior studies on the relevance of Weberianess as benchmarks, this paper tried to explore the relationship between Weberianess and productivity, at macroeconomic cross-country level. Studies that have so far explored the relevance of the Weberian model for productivity, have focused on specific country cases. The two bureaucratic organisational structures examined were bureaucratic professionalism and bureaucratic closedness, while the two macroeconomic productivity measures explored were Total Factor Productivity (TFP) and Average Productivity – AP (measured as GDP per person employed), for the year 2014. Two Quality of Government (QoG) datasets and one World Bank (WB) dataset were used. The sample sizes included both the more developed and the lesser developed nations. Empirically, bureaucratic professionalism showed a positive correlation with both TFP and AP. Bureaucratic closedness, however, was statistically insignificant for both TFP and AP, when measured as both a full index and using its different components. These results indicate that some Weberian principles are still relevant today. One policy recommendation is that states should ensure high professionalism in bureaucratic structures, so that macroeconomic productivity is heightened, as this affects long-run sustainable economic growth.