The Size Of Government And Economic Growth Research

Since China began its reform and opening up from 1978, China' s economy has a long-term rapid growth. China insists on the implementation of a market-oriented economic system, gradually establishes a socialism market economic system ,which has played a key role in China' s economic growth. In the market-oriented reform process, market forces have been given the growing dominance, government forces receded from a growing number of areas, and the allocation of resources increased efficiency. Then is the government irrelevant in the economic growth process because of the market's efficiency in allocating resources? Economics has a answer to this question. Because the existence of the "market failure" , the government should conduct appropriate economic intervention. From the economic growth perspective, an important question we are faced with is, what is the relationship between the government size and economic growth in our country? What the size of government in economic growth is best?This paper comes to further study the relation between the government size and economic growth from two respects of the theoretical and empirical study. This paper is devided into three part. The first part is theoretical research of the relation between the government size and economic growth. In this part, The author reviews the related theory of government size, furtherly analizes the influence of the government mechanisms for economic growth, and conclues that appropriate size of government is the necessary condition for economic growth. On this basis, through analysis of economic growth factors, the author find out the direction for optimizing the size of government in the premise of the appropriate size of government, which will provide a theoretical basis to promote with financial expenditure. The second part is empirical studies of the Chinese government size and economic growth. In this part, on the base of the theoretical studies , the author establishes a model of numerical relationship between government size and economic growth .The author also uses time-series data on government size and economic growth to forecast China's optimal size of government which provide empirical basis for optimization of government size. The third part gives methods to optimize government size. In this part, the author mainly analizes the China' s finance expenditure on infrastructure, scientific research, education, public health, administrative and compares them with other countries in order to provide empirical basis to optimize the size of our government and the fiscal expenditure structure.