Public investment and economic growth in the European Union member states

Liliana Donath, Marius Cristian Milos and Laura Raisa Milos

MPRA Paper from University Library of Munich, Germany

Abstract: The issue of public investments became a very challenging subject for public decision makers since it incorporates the question of state performance, the quality of public finance and their effects on growth.The quality of public finance (QPF) is a multidimensional concept. It may be regarded as representing all the arrangements and operations regarding the financial politics that sustain the macroeconomic objectives, particularly the long-term economic growth. Financial policies at European level highlight the fact that a concentration of the public expenses in areas that stimulate the economic growth and a more efficient use of the public resources are key methods for sustaining the economic growth. The empirical proofs seem to support the assumption according to which certain types of public expenses can supply incentives and other can negatively influence the economic growth. The paper tries to reveal the effects of capital spending on economic growth (GDP per capita) for the European Union member states. The gross domestic product per capita and the capital expenses (functional classification of public expenses - “COFOG”) have been obtained by considering the Eurostat statistics, the measurement unit for the dependent variable and for the independent one is the EURO, while the period of analyze is of 7 years ( 2000-2006)

Keywords: public spending; performance; efficiency; capital expenses (search for similar items in EconPapers)
JEL-codes: H50 (search for similar items in EconPapers)
Date: 2008
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