Impact of public spending on economic growth: A local-level analysis in Ecuadorian cities

Abstract

Introduction: This study analyses the relationship between public spending and urban economic development in Ecuadorian cities, specifically on how investment spending impacts economic growth. Methodology: A panel data model is used to study 19 cities stratified by size, analysing the correlation between current spending and investment. Results: Investment spending has a significant positive impact on economic growth, particularly in metropolitan cities, while current spending exhibits varying effects depending on the level of development. Conclusions: Efficient and strategic public expenditure management is essential for local development. It is recommended to promote greater municipal autonomy and improve intergovernmental coordination.