Government Size,Economic Freedom And Economic Growth

Both the government and the market are indispensable forces to promote economic growth.How to correctly deal with the relationship between them and determine their functional boundaries is of great guiding significance to the economic development of a country.Based on this,from the international perspective,the article explores the government and market in the economic development of the general law.In this paper,by combing and summarizing relevant literature and referring to relevant theories of government and market,the role path of government influencing economic development through market is deeply analyzed,and relevant research hypotheses are put forward.Then,the paper selects the2000-2017 panel data of 151 countries,with government size as a representative of the government and economic freedom index as a representative of the market,uses the fixed effect model,explain the lag issue of estimation of variables and control variables,the dynamic panel system GMM estimation and replace the core variables measure method to estimate,empirical researches on the impact of government size and economic freedom on economic growth,verifies hypothesis.The conclusions are as follows :(1)The influence of government size on economic growth shows a significant inverted U-shaped relationship.For developing countries,the influence of government size on economic growth still shows a significant inverted U-shaped relationship.For developed countries,The expansion of government size has held back economic growth.(2)There is a significant positive correlation between economic freedom and economic growth.The economic freedom effect of developed countries on economic growth is obviously greater than that of developing countries,and the economic freedom level of a country is constantly improving,its growth effect is gradually increasing.(3)The influence of government size on economic freedom presents a significant inverted U-shaped relationship.The influence depends on the interaction of two forces.One is that the expansion of government size makes its intervention in the economy increase,thus restraining economic freedom;The other is that the size of the government expands,but the government’s fiscal expenditure is used to protect the function of the government,improve the protection of property rights and the rule of law,and maintain the market order,thus promoting economic freedom.For developing countries,the influence of government size on economic freedom presents a significant inverted U-shaped relationship.For developed countries,the influence of government size on economic freedom is significantly negatively correlated relationship.(4)Economic freedom plays a mediating role in the influence of government size on economic growth.According to the above conclusions,the paper holds that in the early stage of economic development,the government plays a positive role in economic development,appropriately expands the size of the government,and promotes economic growth.In the later stage of economic development,the market gradually realizes the effective allocation of resources,while the role of the government in economic development gradually declines.Therefore,the government should reduce its intervention in the market and let the market full play to the role of resource allocation.For China,in order to promote China’s economic upgrading and transformation and overcome the trap of middle-income countries,the government should insist on reducing taxes and fees,optimizing the structure of government expenditure,and making market to play a decisive role in resource allocation.It should continue to promote the reform of "streamlining administration,delegating power,strengthening regulation and optimizing services" to release the vitality of the market.