The Optimum Size of Government
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.