Interlinkages between Government Resources Management, Environmental Support, and Good Public Governance. Advanced Insights from the European Union

Abstract

Good governance requires efficiency and effectiveness in public sector management, a sound legal framework, enhanced coordination, credibility, and transparency of the actions that support financial stability. Connecting these actions, there are significant interlinkages between government spending management and economic development. The research conducted within this paper is set to assess the overall relationships within general government spending management, with a keen focus on government support for environmental protection and good public governance at the European Union (EU) level. The study investigates the cumulative effects of good public governance dimensions on economic welfare and poverty lessening. The dataset covers the period 1995–2017, and the methodological credentials are based on the structural equation modelling technique. The main results indicate that not only does government expenditure (including environmental support) shape good public governance, but the enhancements in good governance dimensions also have important spillovers on government spending regarding significant bidirectional connections. As for the overall implications, the estimations show that only general government expenditure has induced welfare increases, while environmental support does not generate the same positive effects. Ultimately, the all-embracing impact of considered governance dimensions is beneficial, leading to a downsizing of poverty within the EU.