Rodrik hypothesis testing in some transition economies and Turkey

While the world is forwarding toward globalization and the state-governments are expected to be more diluted against open market, it is observed that the public sector is growing steadily. Countries that are less resistant to trade liberalization could face various problems. It is believed that there is a relationship between trade openness and the public sector growth and the role of the government in stabilizing the state, thus the increasing in the weight of the state in economy is been thought. With this justification, the need for a stronger public sector in the face of crises has started finding support.In this study, Rodrik Hypothesis, which suggests positive relationship between government size and the risk from trade openness, is analyzed via analysis of panel data for some selected transition economies and Turkish economy. In this context, beside discussing some concepts of government size, trade openness and crises, the validity of Rodrik hypothesis is analyzed with panel data models for the data selected from transitional economies and Turkish economy for the period 1990-2011. In the first part of the empirical analysis, it is found that the strong democracies among transition economies are partly inclined to satisfy Rodrik hypothesis. In the second part, the relationship between external risk and the government size, which indicates the validity of Rodrik hypothesis, is obtained for the mixed regime transition economies of Bosnia and Herzegovina, Ukraine, Georgia and Moldova. In other words, positive relationship between external risk and the size of public sector?s independency from the trade openness is determined for these economies.Key words: Government Size, Openness, Transition Economies, Rodrik Hypothesis