Large government lowers economic growth

The United Kingdom provides additional evidence. The government's share of GDP rose from 32.2 per cent in 1960 to 47.2 per cent in 1982. During this period, the UK's GDP growth rate was 2.2 per cent and there was widespread reference to the 'British disease.' Between 1982 and 1989, government's share of GDP declined by 6.5 percentage points to 40.7 per cent. Responding, the UK's rate of GDP growth increased from 2.2 per cent to 3.7 per cent. While shrinking government has been rare in the past few decades, evidence from places where government has shrunk is consistent with the hypothesis that larger government lowers economic growth. The evidence illustrates that if the size of government is reduced, higher rates of economic growth can be anticipated.
SIZE OF GOVERNMENT IN HIGH-GROWTH NATIONS: The data in Gwartney's study for OECD countries suggests that smaller government is correlated with faster rates of economic growth. The numbers in South Korea, the world's fastest-growing economy during this period, had government expenditures that were relatively stable at between 20 and 21 per cent of GDP. Non-investment government expenditures in South Korea showed a steady decline from just over 15 per cent of GDP to just over 10 per cent during the two-decade period, indicating that South Korea has increasingly been devoting government expenditures toward investment.
The total government expenditures of Thailand, the second fastest-growing economy, were generally less than 20 per cent of GDP throughout most of the period, and they also showed a trend toward increased government investment. Taiwan, third on the list, showed a substantial increase in total government expenditures, from 21.5 per cent of GDP to 30.1 per cent, but still ended the period with government expenditures well below the world average. Taiwan's non-investment government expenditures were still less than 20 per cent of GDP. Singapore and Hong Kong, the next two countries, saw substantial declines in government expenditures as a percentage of GDP, and both countries had 1995 government expenditures well below 20 per cent of GDP.
RIGHT SIZE OF CABINET: The term 'cabinet' is the most easily recognised generic description of this body, but it might create some confusion between cabinet as a collective political body and cabinet. An understanding of the cabinet government is key to an understanding of policymaking within parliamentary democracy as Laver and Shapsls (1994) point out ''any discussion of governance in parliamentary democracies must incorporate a systematic account of cabinet decision- making''. Without such an account, it is impossible to model the making and breaking of governments because it is not possible to specify how legislators envisage the consequence of their actions. Wright (1998) in describing 'ten paradoxes' of the French administration referred to four types of cabinets. First one is Cabinet as Spectator, with major decisions being taken elsewhere in 'central executive territory', either by the chief executive, the chief executive in bilateral negotiation with relevant ministers, cabinet committees, interdepartmental committees of high ranking civil servants, ad-hoc commissions, and so on. In Ireland, Belgium, Sweden, Austria, and the Netherlands, the cabinet is rarely reduced to the role of spectator. The real debate takes place, even if they are sometimes 'framed' by the Prime Minister or Chancellor or by 'pre-cooking' of the party bosses. The second is, Cabinet as Clearing House for rubber-stamping decisions made elsewhere and for formal reporting. The American and Russian cabinets work mainly as spectators and or/clearing house. Third, cabinet is an arena for reviewing, debating ministerial initiatives, and for legitimising decision-making.  Fourth, Cabinet is an actor, with power to initiate, filter, coordinate, and, as final court of appeal, to impose constraint or even vetoes. The British and French cabinets are found carrying all four functions depending on the prevailing position of the chief executive.  Mackie and Hogwood (1985) offered a similar typology of the cabinet.
The form and membership of the cabinet largely vary in developed and developing countries. In Belgium, Germany, the United Kingdom, and English-speaking Commonwealth countries, a cabinet is an assembly of senior party managers or a group including technocrats (Austria, France and Spain), or a combination. In some countries, following Westminster model, parliamentarians are appointed as ministers while in other countries, in particular Spain and Austria, outside experts can be brought in the cabinet. In France, Norway, Gambia and Mongolia, there is an incompatibility rule that one cannot be both minister and member of parliament. The cabinet system in the USA is more alike to disparate collection of individuals who are beholden together only by loyalty to a particular individual. However, earlier in this century, this was not the practice. In Bangladesh, a cabinet is formed with parliament members with a provision of having maximum 20 per cent cabinet members from professionals and technocrats.
The debate over the size of the cabinet is considerable. It is argued that large cabinets allow powerful stakeholders to influence policymaking as Campbell (1996) argued 'a large and broadly representative cabinet at least gives dissenters a sense that their stances have received consideration in the secrecy of cabinet deliberation''. Campbell (1996) identified seven reasons of general opposition to reduction of cabinet size. These are: first, it requires creation of super ministries, which can run into constitutional or legal obstacle. Second, in the countries with government of political coalition it is easier to distribute 25 posts than 14. Third, the reduction of cabinet may reduce the scope of Prime Ministerial patronage.  Fourth, a trade-off can achieve a good coordination within super ministries with coordination at the cabinet level. Fifth, the larger ministries may lead to the emergence of independent power bases for the super ministers and heighten the political stakes in case of conflict. Sixth, the reduction in the number of ministers in the cabinet reduces the chief executive's ability to construct supportive coalitions. Finally, super ministries reduce visibility of junior ministers and hence the capacity of the cabinet to identify their talents or weaknesses.  
Opponents of larger cabinets argue that first, it loses general image of the highest decision-making body of the country that comprises a large number of ministers that a country can hardly afford. Second, it may be helpful to entrenched corruption accommodating larger number of stakeholders in the cabinet, as witnessed during 1990 in Bangladesh and Benazir-Sharif regimes in Pakistan. One may recall available evidence that there was stalemate in the activities of the government as a result of clique among the members of cabinets in 1979-1990 periods.  Third, with a gap created for reason of clique among politicians, the bureaucrats mostly take advantage of handling the administration to isolate people from the politicians. Fourth, the large cabinet offers opportunity for creating an inner or 'kitchen' cabinet---an inner core of the most powerful ministers, friends and family members of the prime minister, leaders of the coalition parties in government, including the head of the government. Such kitchen cabinets have been experienced as a symptom of the weakness of the centre. The very existence of the kitchen cabinet may result in the creation of unofficial and informal meetings of excluded and resentful ministers, ultimately resulting in creating chaotic politics within the government. For example, chaotic politics among the cabinet members during 1979-81 period may be identified as one of the causes of the undesirable death of the BNP's founder president Zia. Subsequently after his death, elected president Justice Sattar officially and publicly had handed over power on the ground of corruption and chaos within the party to military dictator Ershad who systematically damaged democratic institutions. The kitchen cabinet has distinguished ancestry and was  frequently used  during wartimes (Manning et al 1999). Fifth, larger cabinets become expensive in developing and corrupt countries. For example, there are countries like Bangladesh where salaries of the government employees are paid from public borrowings and foreign sources. In such context, Bangladesh cannot afford a huge number of ministers - more than thrice of the OECD average of less than 20 ministers.   
Most cabinets in the OECD countries  cujrrently have around 20 ministers; by contrast, the average size of the cabinets was just over 18 during 1987-95 in the European and African countries. The highest average during that period was 32 in Canada and the smallest was Switzerland, just below eight. Following some four decades of expansion after 1945, there has been light trend toward further reduction in the cabinet size of the OECD countries in the past decade. The Australian government reduced the number of government departments from 28 to 18 in July 1987 and cabinet portfolios to 16. The cabinet was further reduced to 14 in 1996. Similarly, Canada radically reduced the size of its cabinet in 1993. The Hungarian cabinet was reduced from 20 in 1987 to 15 in 1999. These are proven to be the beginning of downsizing the government from the top for right sizing of public sector. Because, reducing the role of public sector enlarges the role of private sector that is private institutions of the country. Downsizing of public sector means that less money is taken and spent by the government and more money left in the hands of the people, to be spent in the marketplace, broadly defined.  Less borrowing by the government means that there is less crowding out in the market for money, and, therefore, more capital available for private borrowing and job-creating investment.
Jamaluddin Ahmed, PhD, FCA is the General Secretary of Bangladesh Economic Association. In professional life, he is Chairman, Emerging Credit Rating Limited.
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