Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319874 
Year of Publication: 
2025
Series/Report no.: 
IDOS Discussion Paper No. 16/2025
Publisher: 
German Institute of Development and Sustainability (IDOS), Bonn
Abstract: 
This paper examines the effect of public expenditure efficiency on FDI inflows, using data on a panel of 100 developing countries from 1990 to 2017. We find robust evidence that improvements in public expenditure efficiency significantly increase FDI inflows. This effect is complementary to institutional quality, per capita income and binding fiscal frameworks such as fiscal rules. Our findings highlight that, in addition to promoting the sustainability of public finances, the efficient use of public resources can exert significant positive spillover effects on the attractiveness of developing countries to foreign investors.
Subjects: 
Public expenditure efficiency
Foreign direct investment
Developing countries
JEL: 
E6
F21
H6
O11
Persistent Identifier of the first edition: 
ISBN: 
978-3-96021-261-4
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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