Government investment in the EU: the role of institutional factors

This part of the European Commission's report on public finances in EMU 2017 analyses the main drivers of government investment in the European Union. It puts a special emphasis on the role of institutional factors, such as the institutional arrangements across levels of government, the quality of governance and national fiscal rules. The main findings are threefold. First, governance quality is a key element to improve the value for money of public investment. This is the case both at the national and the sub-national level in all Member States analysed. Second, sub-national governments are at the forefront of public investment. Local governance, institutional arrangements and coordination across levels of governance are therefore key elements for the proper provision of public investment. Third, a sound institutional setup can support public investment. Strengthened fiscal rules can mitigate the depressionary effect of public debt on public investment.