A Research Of Economic Effect Of Government Investment In Anhui Province

Government investment plays an important role in economicdevelopment and industrial restructuring. In this paper, firstly, governmentinvestment and its theories are described. Then, the economic effects ofgovernment investment are analyzed with the method of industrialrelevance theory. Secondly, an extended input-output mode is built whichtests the data of input-output table of Anhui province in2007.The coefficients in42industries are gained. Finally, referring thecoefficients and the industrial structure, the paper proposes its policyrecommendations for government investment of Anhui Province.The results shows that the investment coefficient and the sensitivitycoefficient are significantly different between the industries, extensiveeconomic growth is obvious, industries that lie on the upstream of theindustries chains contribute most to the economic growth. According to theabove conclusions, firstly, government should allocate investmentrationally and give more supports to the key industries while rationallyallocating the directions of government investment in order to promoteindustrial structure and emerging industries. Furthermore, the evaluationand supervision of government investment should be strengthened just for alow rate of rent-seeking behavior.