Public investment efficiency affects economic growth differently in efficient and inefficient countries. Contrary to popular belief, increasing public investment spending in inefficient countries does not necessarily have a lower impact on growth. This is because the marginal product of public capital decreases as the capital/output ratio rises. Therefore, efficiency and scarcity of public capital are likely to be inversely related across countries. It is important to consider both efficiency and the rate of return when assessing the impact of investment. Structural reforms that increase efficiency can have significant positive effects on growth.