ABSTRACT
Government revenue comes from enterprises and households in the form of business and income taxes. Part of the government revenue goes to public consumption and the rest (government savings) goes to public investment. In many developing countries, where personal income is often low and household and business savings are often small, government savings are frequently the main source of funds for investment; however, personal and business income will grow as an economy develops, and so do household and business savings. This is also
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the case in China, where the government savings were the major source of investment until the early 1980s. As the economy developed further, household savings grew rapidly and replaced the government funds as the main source of investment funds. This will be discussed in detail in Chapter 5.
