Debt-Financed Public Investment in Developing Countries: Does the Efficiency of Public Investment Matter?

Amarachukwu Anthony Anyanwu

doi:10.20944/preprints202009.0284.v1

Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

Version 1 : Received: 11 September 2020 / Approved: 13 September 2020 / Online: 13 September 2020 (12:09:52 CEST)

This study examines whether government spending efficiency is associated with differential effects of public investment on debt-to-GDP ratio for a panel data consisting of 16 developing countries in Asia-Pacific region over the period 2007-2017. Public investment is central to implementing the UN 2030 Agenda for Sustainable Development — but high debt-to-GDP ratio poses a key risk. The empirical results indicate that public investment efficiency moderates debt-to-GDP ratio whereas public investment in the midst of public sector corruption accentuates debt-to-GDP ratio. The results have important policy implications.

public debt; government spending efficiency; public investment; public sector corruption

Business, Economics and Management, Economics

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Debt-Financed Public Investment in Developing Countries: Does the Efficiency of Public Investment Matter?

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