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Interrelationship Between Public Investments and Economic Developement in the EU Counties

Author

Listed:
  • Desislava Zheleva Kalcheva

    (Director Department Risk Management, Fund for Local Authorities and Governments, Sofia)

Abstract

Public investments are an essential precondition for ensuring the appropriate structural environment in which the economy of a region works. Public investments are made in order to address horizontal issues in the areas of education, training, healthcare, infrastructure and in other areas. The main purpose of this report is to find the link between public investments and economic development in the EU countries. We use the indicator ”Gross capital formation in the General Government Sector” in order to measure the level of public investments. Investments made at the local level, at the central level, by the state, and by the social security funds, are within the scope of the indicator. By establishing distinct cluster groups, a cluster analysis is made as a basis for tracking the relationship between share of public investments in the GDP and in the GDP/per capita. Summarizing the results of conducted analyses we reach the conclusion that countries of Central and Eastern Europe stand out with a higher share of public investments in the GDP compared to the other EU countries. We observe higher value of GDP per capita and lower value of public investments as a share of the GDP in the countries of Western Europe.

Suggested Citation

  • Desislava Zheleva Kalcheva, 2017. "Interrelationship Between Public Investments and Economic Developement in the EU Counties," Business & Management Compass, University of Economics Varna, issue 3, pages 281-290.
    • Handle: RePEc:vrn:journl:y:2017:i:3:p:281-290
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    References listed on IDEAS

    as
    1. Jean-Marc Fournier, 2016. "The Positive Effect of Public Investment on Potential Growth," OECD Economics Department Working Papers 1347, OECD Publishing.
    2. Jean-Marc Fournier & Åsa Johansson, 2016. "The Effect of the Size and the Mix of Public Spending on Growth and Inequality," OECD Economics Department Working Papers 1344, OECD Publishing.
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    7. Debra Bloch & Jean-Marc Fournier & Duarte Gonçalves & Álvaro Pina, 2016. "Trends in Public Finance: Insights from a New Detailed Dataset," OECD Economics Department Working Papers 1345, OECD Publishing.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    public investments; economic development; public infrastructure; Gross capital formation in the General Government Sector; Gross domestic product per capita;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories

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