Factors Influencing Local Government Investment Decision

Local communities’ sustainable development represents a key topic on public governments’ agenda, thus raising the problem of social and economic growth determinants, which could be shaped throughout promoted public policies. In this context, public investment plays a crucial role, being considered as a main trigger of local development on medium and long term, in close connection with the quality of the associated decision-making process. Under democratic values as decentralization, local autonomy and self-government, public investment decisions are configured by local authorities while facing particular constraints or influence factors, both related to endogenous sources (e.g. administrative capacity, legal collaborative partners, competence or legal constraints) or exogenous ones (as financial market conditions, corruption, institutional arrangements, politics etc.), which are in the end affecting the quality of the adopted decisions. From this perspective, our study aims first to identify the factors potentially affecting the local governments’ investment decision, to emphasize the particular transmission channels of their influence and to reveal their potential expected impact. On this base, we also aim to suggest some alternatives to counteract the negative effects of the discussed factors, as useful inputs for (new) public policies.