The document discusses the role of public finance and governments in economic development. It argues that mainstream development economics has overlooked the efficiency of public finance and the role of governments. A new model of economic development is proposed that analyzes how institutional changes like budget systems can reduce transaction costs and improve the efficiency of public goods provision by governments. Case studies are cited that compare how different political and budget systems have affected how efficiently governments supply public goods in countries.

1. The efficiency of public finance, the role of Government and the economic development in undeveloped areas Song Bingtao School of Economics, Henan University, China [email_address]