Promoting Global Sustainable Development Goals ( SDGs ) Through Aggregate and Sectoral Public Spending: Is More Always Better?

ABSTRACT

Achieving the Sustainable Development Goals (SDGs) remains a central challenge in the global policy agenda, with public spending playing a pivotal role in advancing economic, social, and environmental dimensions of sustainability. Yet the extent to which fiscal policy fosters global SDG progress and whether its effects follow a linear or nonlinear path remains unclear. This study examines how aggregate and sectoral government spending influences SDG performance across a cross‐national panel over more than two decades. The results show that government spending, both at the aggregate level and across major sectors such as education, health, research and development, and the military, has statistically significant effects on SDG advancement. Importantly, these effects are nonlinear. Aggregate and sectoral public expenditures exhibit inverted U‐shaped relationships with SDG performance, indicating diminishing sustainability returns beyond certain spending thresholds. Moreover, the nonlinear effects are heterogeneous across countries and spending categories, with estimated turning points and optimal spending levels varying systematically along the SDG distribution. By highlighting the nonlinear and heterogeneous nature of fiscal‐sustainability linkages, this study demonstrates that advancing the SDGs depends not merely on expanding public spending but on calibrating its scale and composition to country‐specific conditions. The findings offer policy‐relevant insights for designing fiscal strategies that support long‐term sustainable development.