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Size, Governance & Expenditure On Defence & Education: Realpolitik & the Peace Dividend for Small Economies

Research output: Contribution in Book/Report/Proceedings - With ISBN/ISSNChapter (peer-reviewed)peer-review

Publication date18/12/2020
Host publicationHandbook of Governance in Small States
EditorsLino Bruguglio, Jessica Byron, Stefano Moncada, Wouter Veenendaal
Place of PublicationLondon
Number of pages20
ISBN (Electronic)9780429061356
ISBN (Print)9780367183998
<mark>Original language</mark>English

Publication series

NameRoutledge International Handbooks


This chapter investigates Kuznets’ argument that small economies support disproportionately large government sectors, with a specific focus on the relationship between country size and expenditure on defence and education. As expected, the study finds a significant negative relationship between country size (measured in terms of population) and the government sector for both GNI and government consumption, using averaged data 2015-17. Defence expenditure however, is found to be positively and significantly related to country size, contrary to Kuznets’ inference. This finding accords with evidence of higher levels of governance and institutional quality in conjunction with realpolitik in small economies. Lower expenditure on defence generates a ‘peace dividend’ that facilitates potentially greater proportionate spending on social objectives.