Vol.14, No.2, May 2025.                                                                                                                                                                          ISSN: 2217-8309

                                                                                                                                                                                                                        eISSN: 2217-8333

TEM Journal

TECHNOLOGY, EDUCATION, MANAGEMENT, INFORMATICS

Association for Information Communication Technology Education and Science

Public Expenditure and Economic Growth: Estimation of Impact at the Local Level in Cities of Ecuador

Alex Olalla-Hernández, Yadira Armas-Ortega, Rafael Sorhegui-Ortega, Lisette Garnica-Jarrin

© 2025 Lisette Garnica-Jarrin, published by UIKTEN. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License. (CC BY-NC-ND 4.0)

Citation Information: TEM Journal. Volume 14, Issue 2, Pages 1243-1249, ISSN 2217-8309, DOI: 10.18421/TEM142-25, May 2025.

Received: 09 August 2024.

Revised:  05 February 2025.
Accepted: 27 February 2025.
Published: 27 May 2025.

Abstract:

Public spending and economic growth are analyzed from a global context, with productive dynamism, leading to an important separation between current spending (government operations) and investment spending (infrastructure). This investigation contributes to the vast amount of information and examines the correlation between public expenditure and economic growth at Ecuador's subnational level, using a panel of 19 cities from 2007-2019. A fixed-effects panel data standard estimates the influence of current and investment spending on the growth of per capita Gross Value Added. The results show that, in line with endogenous growth theory, public expenditure progressively and significantly affects economic growth. However, significant heterogeneity is observed in the effects of expenditures according to city size, with investment spending being more critical in larger cities and current expenditures in smaller towns. These findings highlight the importance of designing local fiscal policies adapted to each city's specific characteristics and promoting sustainable economic growth.

Keywords – Public expenditure, economic growth, endogenous growth, panel data, fiscal policy.

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