Socioeconomic Contexts of Government Expenditure Across OECD Countries: A Complementary Perspective From Trust and State-Business Relations

In contrast to the literature which analyzes government size using contingent factors, this article proposes that socioeconomic traditions, such as trust and state-business relations (SBR), complement the explanations of government size in an economy. Using 29 Organization for Economic Co-Operation and Development (OECD) countries from 1995 to 2008, this study shows that a high level of trust is negatively related to government expenditure, whereas tight SBRs are positively related to it even under the decreasing trend of government expenditure. We suggest that attention should be paid to the societal contexts of an economy in addition to its contingent factors, when analyzing changes in political economic activities.