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Potential for Savings and Efficiency Enhancement in Public Administration. Results of an International Benchmarking Analysis

  • Angelika Pasterniak
  • Hans Pitlik

    (WIFO)

The frequently expressed assumption that there is significant savings potential in Austria's public administration is based on the general notion that Austrian bureaucracy is "too large" and/or "too expensive". In the context of ongoing discussions on administrative reform, this study compares administrative expenditures in Austria with expenditures in other EU and OECD countries. Independently of the definition of administrative expenditures selected, Austria generally falls into the international mid-range, with high savings potential found in Austria's general administration. Depending on the country of reference examined, and under the assumption of equal quality and range of administrative services among countries, we find a theoretical efficiency reserve of ¾ to € 2½ billion – even when taking into account diseconomies of scale of Austria as a small country. Based on an international performance and efficiency comparison, we still find significant efficiency reserves in Austria's general public administration. WIFO estimates point toward another € ½ billion of additional savings potential that could be attained by reducing the complexity of legislation and administrative processes.

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Article provided by WIFO in its journal Quarterly.

Volume (Year): 14 (2009)
Issue (Month): 1 (March)
Pages: 23-40

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Handle: RePEc:wfo:wquart:y:2009:i:1:p:23-40
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  1. Elsa Pilichowski & Edouard Turkisch, 2008. "Employment in Government in the Perspective of the Production Costs of Goods and Services in the Public Domain," OECD Working Papers on Public Governance 8, OECD Publishing.
  2. Douglas Sutherland & Robert W.R. Price, 2007. "Linkages Between Performance and Institutions in the Primary and Secondary Education Sector," OECD Economics Department Working Papers 558, OECD Publishing.
  3. Ulrike Mandl & Adriaan Dierx & Fabienne Ilzkovitz, 2008. "The effectiveness and efficiency of public spending," European Economy - Economic Papers 301, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  4. Niskanen, William A, 1975. "Bureaucrats and Politicians," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 617-43, December.
  5. Hans Pitlik, 2008. "Theoretical Key Elements for a Fundamental Reform of Federal Fiscal Relations," Austrian Economic Quarterly, WIFO, vol. 13(1), pages 22-35, April.
  6. Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, number 9780521894753.
  7. Williamson, Oliver E, 1999. "Public and Private Bureaucracies: A Transaction Cost Economics Perspective," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 306-42, April.
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