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Determinants of Government Efficiency

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Author Info

  • David Hauner
  • Annette Kyobe

Abstract

We compile the first large cross-country panel dataset of public sector performance and efficiency, encompassing 114 countries on all income levels from 1980 to 2006, with about 1,800 country-year observations for the education sector and about 900 observations for health. We regress these indicators on potential economic, institutional, demographic, and geographic determinants. Our most resounding conclusion is that higher government expenditure relative to GDP tends to be associated with lower efficiency in the respective sector. Moreover, we find that richer countries exhibit better public sector performance and efficiency, and that institutional and demographic factors also play a significant role.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 08/228.

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Length: 25
Date of creation: 01 Sep 2008
Date of revision:
Handle: RePEc:imf:imfwpa:08/228

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Keywords: Fiscal policy; Government expenditures; Government accounting; Economic indicators; Gross domestic product; Public finance; Economic growth; Economic models; expenditure; health spending; public spending; health sector; health expenditure; expenditure efficiency; government expenditure; public health spending; public health; higher expenditure; health database; public expenditure; efficiency of government expenditure; health indicators; social expenditure; private spending; budget process; economies of scale; health care; income groups; infant mortality; share of public spending; long-term expenditure; provision of health care;

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References

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  17. Jayasuriya, Ruwan & Wodon, Quentin, 2003. "Measuring and Explaining Country Efficiency in Improving Health and Education Indicators," MPRA Paper 11183, University Library of Munich, Germany.
  18. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, Elsevier, vol. 126(1), pages 25-51, May.
  19. Herrera, Santiago & Pang, Gaobo, 2005. "Efficiency of public spending in developing countries : an efficiency frontier approach," Policy Research Working Paper Series 3645, The World Bank.
  20. Hauner, David, 2008. "Explaining Differences in Public Sector Efficiency: Evidence from Russia's Regions," World Development, Elsevier, Elsevier, vol. 36(10), pages 1745-1765, October.
  21. Desai, Raj M. & Freinkman, Lev & Goldberg, Itzhak, 2005. "Fiscal federalism in rentier regions: Evidence from Russia," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 814-834, December.
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Citations

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Cited by:
  1. Lledó, Victor & Poplawski-Ribeiro, Marcos, 2013. "Fiscal Policy Implementation in Sub-Saharan Africa," World Development, Elsevier, Elsevier, vol. 46(C), pages 79-91.
  2. Vratislav Izák, 2011. "The Welfare State and Economic Growth," Prague Economic Papers, University of Economics, Prague, University of Economics, Prague, vol. 2011(4), pages 291-308.
  3. Fadzlan Sufian & Muzafar Shah Habibullah, 2010. "Financial Disruptions and the Evolution of Malaysian Banking Sector’s Efficiency: A Non-Stochastic Frontier Approach," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 166-186.
  4. Susana Martins & Francisco José Veiga, 2013. "Government size, composition of public expenditure, and economic development," NIPE Working Papers, NIPE - Universidade do Minho 17/2013, NIPE - Universidade do Minho.

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