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The quality and efficiency of public service delivery in the UK and China

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    Abstract

    In this paper we examine the efficiency of public service delivery at regional level in two countries, the UK and China. We introduce a method based on Data Envelopment Analysis (DEA) which measures the aggregate country level inefficiency. This country level inefficiency is then decomposed into three components: 1) lack of best practices at regional level; 2) quality of the public service delivery; 3) potential efficiency gains realizable via reallocation of inputs across regions. Our empirical results show that UK and China behave very differently across these three dimensions. Most of UK inefficiency comes from the reallocation effect, while most of the Chinese inefficiency is attributable to lack of best practices. UK also shows higher levels of quality with respect to China. We speculate about the fiscal centralization/decentralization structure of the two countries as a possible explanation for such differences.

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    File URL: http://www.uq.edu.au/economics/cepa/docs/WP/WP052013.pdf
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    Paper provided by School of Economics, University of Queensland, Australia in its series CEPA Working Papers Series with number WP052013.

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    Date of creation: Sep 2013
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    Handle: RePEc:qld:uqcepa:88

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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
    2. Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
    3. Timothy Van Zandt, 1997. "Real-Time Hierarchical Resource Allocation," Discussion Papers 1231, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    4. Färe, Rolf & Grosskopf, Shawna, 2012. "Regulation and Unintended Consequences," CERE Working Papers 2012:17, CERE - the Center for Environmental and Resource Economics.
    5. Vladimir Nesterenko & Valentin Zelenyuk, 2007. "Measuring potential gains from reallocation of resources," Journal of Productivity Analysis, Springer, vol. 28(1), pages 107-116, October.
    6. Jing Jin & Chunli Shen & Qian Wang & Heng-fu Zou, 2012. "Decentralization in China," CEMA Working Papers 546, China Economics and Management Academy, Central University of Finance and Economics.
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