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The effect of government investment — Based on an IO model | IEEE Conference Publication | IEEE Xplore

The effect of government investment — Based on an IO model


Abstract:

Chinese government has raised an amount of investment to prevent the national economy from the financial crisis impact and to make economy increase stably and rapidly. Ho...Show More

Abstract:

Chinese government has raised an amount of investment to prevent the national economy from the financial crisis impact and to make economy increase stably and rapidly. How to maximize the utility of government investment plays an important role in the development of China. In view of the fact that government investment transmitting through the industrial chain can generate pull effect, and the fact of overcapacity in some industrial sectors, this paper applies the theory of input-output model and establishes a model to measure the impact of the investment's orientation and intensity on China's economy development. Finally, the conclusions and suggestions have been presented based on the analyses.
Date of Conference: 24-26 November 2010
Date Added to IEEE Xplore: 24 February 2011
ISBN Information:

ISSN Information:

Conference Location: Melbourne, VIC, Australia

1 Introduction

Unlike developed countries, in the process of development, government-led investment has played a key role in promoting economy in China. As seen from Table. 1, since 1990s, in the composition of China's GDP, the capital formation rate raised from 34.9% in 1990 to a record high 43.2% in 2004, after that, this figure went down to around 42.5%. At the same time, the final consumption rate fell from 62.5% in 1990 to 48.8% in 2007. Investment has also made a great contribution to GDP growth throughout these years.

References

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