INTERRELATIONSHIP BETWEEN PUBLIC INVESTMENTS AND ECONOMIC DEVELOPEMENT IN THE EU COUNTIES

Public investments are an essential precondition for ensuring the appropriate structural environment in which the economy of a region works. Public investments are made in order to address horizontal issues in the areas of education, training, healthcare, infrastructure and in other areas. The main purpose of this report is to find the link between public investments and economic development in the EU countries. We use the indicator ”Gross capital formation in the General Government Sector” in order to measure the level of public investments. Investments made at the local level, at the central level, by the state, and by the social security funds, are within the scope of the indicator. By establishing distinct cluster groups, a cluster analysis is made as a basis for tracking the relationship between share of public investments in the GDP and in the GDP/per capita. Summarizing the results of conducted analyses we reach the conclusion that countries of Central and Eastern Europe stand out with a higher share of public investments in the GDP compared to the other EU countries. We observe higher value of GDP per capita and lower value of public investments as a share of the GDP in the countries of Western Europe.