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In the globalization age, global competitiveness is gaining attention from policymakers and scholars. This paper focuses on a measurement of trade competitiveness based upon the expansion of market size. Fiscal policy has become a subject of debate since the global crisis of 2008. This paper attempts to examine the influence of government spending (i.e., government investment and consumption) on trade competitiveness. The Autoregressive Distributed Lags (ARDL) approach is used to estimate the dynamic relationship. The result, based on Cambodia's annual data from 1970 to 2015, shows that Cambodia’s trade competitiveness increases when there is a rise in public investment, government purchases, or aggregate private spending. This study shapes an alternative perception of the effectiveness of fiscal policy as domestic expenditure in enhancing international macroeconomic activities.

Scholars and policymakers have vigorously debated what the impact of government spending on economic growth is. Some current research and theoretical models suggest that the reaction of economic growth to the extension of government spending can be either positive or negative. This article intends to investigate the inverted-U shaped relationship between output growth and government spending (i.e., government fixed capital formation [GFCF] and government final consumption expenditure [GFCE]). Ordinary least squares (OLS) is employed as an approach to annual data for Cambodia obtained from 1971 to 2015. The result reveals that GFCF and GFCE have an inverted-U shaped relation with economic growth and that 5.40% and 7.23% are the optimal values of GFCF and GFCE, respectively. The labour growth rate and export growth rate contribute positively to the growth rate of output. This study indicates that the increasing level of government expenditure reduces the efficacy of government spending, and also helps Cambodia’s policymakers to control fiscal policy more efficiently. JEL Classification: C80, E62, H50, O40