Gökay Canberk BULUŞ
This study analyzes the relationship between government size and economic growth in South Korea within the framework of the Armey Curve hypothesis, based on data covering the period 1975–2023. To determine the effect of government expenditure on economic performance, the ARDL bounds test method was used, which can simultaneously capture both short- and long-term dynamic interactions between variables. Empirical analysis results reveal that the optimal government size that maximizes the growth rate for the South Korean economy is 26%. The findings prove the existence of a non-linear inverse-U relationship between government expenditure and economic growth, in other words, that the Armey Curve hypothesis is valid for South Korea. These findings are of critical importance for South Korean policymakers. In order to maintain economic sustainability, balancing government expenditure at its optimal level, establishing fiscal discipline with reference to this optimal threshold, and increasing efficiency in resource allocation are strategic necessities.