Governance, Public Expenditure and Sustainable Development: Evidence from Developed Economies
DOI:
https://doi.org/10.59926/jodprp.vol10/2026/11Keywords:
Governance Index, Public spending, Sustainable development index, Financial development index, Globalisation index, Misery Index, Panel GMM, Panel 3SLSAbstract
It is generally agreed that achieving sustainable development depends on good governance and the effective allocation of funds. But from the perspective of high income countries, prior empirical research has so far focused on the impact of governance on ecological sustainability, and studies on the role of public spending in achieving sustainable development are largely lacking. Thus, this paper aims to examine the nexus of governance, public spending, and sustainable development in the case of high income economies. The appropriate econometric methodology for panel data analysis has been selected based on endogeneity, in addition to a small T and a large N. The data contains a panel of 34 countries for 17 years (2006-2022), where N=34 is larger than T=17. For this purpose, the panel Generalised Method of Moments (GMM) is a suitable methodology for analysis. The empirical findings show a positive and significant impact of governance and public spending on sustainable development. The outcomes indicate that governance and sustainable development have a significant impact on public spending. Public spending has a negative impact on governance, whereas sustainable development has a significant impact on governance. It suggests that high income countries should focus on eliminating expenditure trends directed towards political elites and unproductive subsidies, all of which undermine the effectiveness of the governance structure. Governments should strengthen auditing and regulatory institutions to ensure efficient, transparent and accountable use of public funds.
JEL Classification Codes: O16, P35, Q01
Conflict of Interest: The authors declare no conflict of interest.
Acknowledgement: The views and opinions are those of the authors and do not represent the views of any institution.
AI Declaration/Use of Generative AI: No AI tools were used in this study.
Funding: No
Article History
Submitted: 9 June 2026; Last Revised: 22 Aug. 2026; Accepted: 15 Sep. 2026
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