While there are strong theoreticalarguments for ways in which public spending influencesgrowth, robust empirical links have been difficult toestablish. More recently, many of the methodologicalproblems that plagued the earlier literature have beenovercome and interesting policy lessons drawn. The number ofstudies of developing countries using these new approachesis still limited, due to data scarcity and othercomparability issues, but overall findings from the newliterature are relevant for developing country policy makersand also open new venues for future research. The objectiveof this note is to present these new empirical resultstogether with the methodological improvements that supportthem, and to outline some of the issues that need deeperanalysis and empirical study, particularly in developing countries.
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