The Effect of Public Expenditures on the Relationship between Foreign Direct Investment and Economic Growth

Most studies have engaged in inspecting the effect of foreign direct investment or public expenditures on economical growth separately but the mutual effect between the variable was not considered. The outcomes of present study demonstrates that in developed countries, the enlargement of government size is because of forming proper infrastructures, health and public goods, which this fact causes the absorption of more investments and leaves more effect on economic growth. But in developing countries the enlargement of government due to the enhancement of governmental companies budget and also the lack of sufficient infrastructures, and political stability and countries changing of rules and regulations causes that the mutual effect of direct foreign investment and public expenditures on economical growth become negative.