Volltext: Very small countries: economic success against all odds

services by all levels of government, excluding most governmental en - terprises (IMF International Financial Statistics). We therefore decided to rely on public consumption in the regressions as a proxy for govern- ment size throughout this study. The choice of an adequate proxy for country size seems trivial. Naturally, one would expect that it should matter little whether, for in- stance, the number of inhabitants or GDP and/or GNP is selected, but empirical evidence in Section 3.2.5 shows the opposite. Generally, three criteria can be brought into play when country size is assessed: the num- ber of inhabitants, the area and economic size (GDP and/or GDP), and, of course, combinations of these criteria. In connection with economies of scale, where the number of consumers of public goods plays a crucial role, it is intuitively justified that the proper proxy for country size is the number of inhabitants. We will stick to this operationalization through- out this chapter, with the exception of Section 3.2.5, where two proxies, the number of inhabitants and GNP, are 
compared. 3.2.2 Description of data and basic statistics The availability of reliable data plays a crucial role in examining the re- lationship between government size and country size as insofar availabi- lity is biased towards larger and developed countries. Only a few VSC provide statistics comparable to, say, OECD members, and very few are considered in international data compilations like the Penn World Tables of the National Bureau of Economic Research or the Barro-Lee data set. Table A.3 in the Appendix gives an overview of the data used in the re- gressions and their origin. In Table A.4 in the Appendix, pairwise corre- lation coefficients are displayed. Initially, it is helpful to give a visual sense of the relationship be - tween government size and country size, represented by government consumption as a percentage of GDP and the number of inhabitants, re- spectively. Data are derived from the IMF International Financial Statistics and averaged over the period 1993–1997.51Figure 3.1 shows a 51 
Empirical evidence 51This is the most recent five-year period for which a sufficiently large sample of coun- tries is available.


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