Government Financial Behavior and Long-Term Economical Performance

In this study، government budgets in the last 150 years have been examined based on Leviathan state and the selection process theories. Using this descriptive-historical method we evaluate the impact of financial behavior of government on development. In the first section of this paper، the concept of government nature has been defined and its influence on public finance is fully explained. Moreover، an oil-based economy and the role of public finance in this kind of economy are assessed. In the second section، we discuss how the English revolution caused a significant modification in nature of government، and played an important role in the industrial revolution and development in England. Later in the third section، we review the contemporary history of Iran، and examine whether any change of policies could possibly lead to an alteration of government nature، modification of financial system، and development improvement. In the fourth section، tree different experiences in monetary reform policies are investigated، and results are discussed. Finally it is concluded that in all the examined years، government’s interference with performance of enterprises has always resulted in minimizing investment incentives. In other words، rather than being a development motivator، government is seen as an obstacle in development procedure due to wrong policies and inefficient property rights.