Articles ISSN 1313 - 0544

The Optimum Size of Government

04.08.2009
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MOST GOVERNMENTS ARE TOO LARGE

TO MAXIMIZE JOB CREATION AND ECONOMIC GROWTH

NEW STUDY FINDS

Over the last several decades, economists have tried to determine and quantify the optimum size of government (recognizing that not all governments and societies are the same).  Most studies have shown the optimum size of government is between 12% and 30% of GDP.  The new IME study finds (using standard methodology) the government sector should be no larger than 25% (and perhaps considerably smaller) to maximize GDP growth.  All major governments, including the U.S., Germany, U.K., France, and Italy  The average government sector for the OECD countries now exceeds 41% of GDP. greatly exceed that level.

The results of the IME study indicate that policy makers who are enlarging their government sectors in the name of "economic stimulus" are likely to be retarding the renewal of economic growth and job creation rather than enhancing it.

The study was sponsored by the non-partisan Center for Freedom and Prosperity Foundation in the United States and the European Coalition for Economic Growth based in Vienna, Austria.

The entire study - The Optimum Size of Government - may be obtained from here along with a video which explains the study and its results.