Public expenditure efficiency and foreign direct investment in developing countries
Bambe, Bao-We-Wal / Adama Ouedraogo (2025)
Discussion Paper 16/2025
Using 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.