Studia Universitatis Vasile Goldis Arad, Economics Series | 2026
Authors: Ho T.L.; Ngoc L.H.
DOI: 10.2478/sues-2026-0005
Journal: Studia Universitatis Vasile Goldis Arad, Economics Series
Year: 2026
Publisher: Sciendo
Document Type: Article
Open Access: All Open Access; Gold Open Access; Green Open Access
Cited by: 1
This study explores the untapped potential of public spending in promoting sustainable development, with a particular focus on the moderating role of governance quality across 45 developing countries from 2002 to 2023. By employing the System Generalized Method of Moments (S-GMM) and robustness tests using the Method of Moment Quantile Regression (MMQR), the research highlights the significant positive effect of public expenditure on sustainable development outcomes. Furthermore, the study breaks new ground by illustrating how governance quality moderates this relationship, demonstrating that stronger governance frameworks contribute to higher levels of sustainable development. However, the analysis uncovers nuanced effects: in settings at very high levels of governance quality, the marginal returns of additional public spending diminish, suggesting that resource allocation is already optimized in such environments. These findings emphasize the critical role of governance quality in unlocking the full potential of public spending for sustainable development. The study provides original insights into how policymakers can strategically optimize public investment by aligning it with institutional improvements, thereby enhancing the sustainability of development efforts. © 2026 Thi Lam Ho et al., published by Vasile Goldis Western University of Arad.
GMM; governance quality; MMQR; Public spending; sustainable development