2025, Vol. 8, Issue 1

author(s)
Mushfig Ramazanli

abstract
Capital budgeting is a cornerstone of public financial management, guiding how governments allocate scarce resources to long-term investment projects that shape economic development, social progress, and environmental sustainability. This article explores the role of capital budgeting in public investment decisions by examining its theoretical foundations, practical applications, institutional frameworks, and common challenges. It analyzes various techniques such as cost-benefit analysis, multi-criteria evaluation, and life-cycle costing, and discusses how countries like Canada, Chile, South Korea, the UK, and Azerbaijan have institutionalized best practices. The study highlights the importance of transparency, public participation, intergovernmental coordination, and integration of climate and sustainability goals into capital investment planning. Drawing on recent scholarly contributions and international guidelines, it presents a set of policy recommendations to improve public investment efficiency, enhance governance, and promote inclusive and resilient development. Ultimately, it argues that capital budgeting is not only a technical exercise but also a critical policy instrument for achieving long-term national priorities and global development commitments.