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Debt-financed public investment in developing countries: Does the efficiency of public investment matter?

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  • Amarachukwu Anthony ANYANWU

    (Lincoln University, New Zealand)

Abstract

Public investment is central to implementing the UN 2030 Agenda for Sustainable Development – but persistent levels of high public debt without sufficient debt-servicing capacity poses serious risks. 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. 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.

Suggested Citation

  • Amarachukwu Anthony ANYANWU, 2021. "Debt-financed public investment in developing countries: Does the efficiency of public investment matter?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(626), S), pages 259-272, Spring.
    • Handle: RePEc:agr:journl:v:1(626):y:2021:i:1(626):p:259-272
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    References listed on IDEAS

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