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Field adjustments in transition economies : social transfers and the efficiency of public spending - a comparison with OECD countries

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  • Fakin, Barbara
  • de Crombrugghe, Alain

Abstract

Despite a dramatic shift away from subsidies in the early years of transition, the countries of Central Europe still show signs of unsuccessful fiscal adjustment, insufficient deficit reduction, and loose spending policy. High social transfers and low efficiency of government spending remain two challenges of fiscal adjustment and long-term sustainability of budgetary policy choices. A cross-country regression analysis shows that the problems with high social-security outlays are largely the result of loose eligibility criteria (many pensions go to early retirees) under current state pay-as-you-go pension systems - and not so much to old populations or high replacement rates. The authors suggest that transition economies should strive for a real social consensus on the reform of future pension rights. The transition to a funded pension system could be financed by a combination of: government debt; proceeds from privatization; and efficiency gains from lowering and/or restructuring government spending in favor of infrastructure, retraining, and market-oriented tertiary education.

Suggested Citation

  • Fakin, Barbara & de Crombrugghe, Alain, 1997. "Field adjustments in transition economies : social transfers and the efficiency of public spending - a comparison with OECD countries," Policy Research Working Paper Series 1803, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1803
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. António Afonso & Miguel St. Aubyn, 2005. "Non-parametric approaches to education and health efficiency in OECD countries," Journal of Applied Economics, Universidad del CEMA, vol. 8, pages 227-246, November.
    2. Christiaensen, Luc & Scott, Christopher & Wodon, Quentin, 2002. "Cibles du développement et coûts
      [Development targets and costs]
      ," MPRA Paper 10494, University Library of Munich, Germany.
    3. World Bank, 2003. "Public Expenditure Review for Armenia," World Bank Publications, The World Bank, number 15086, January.
    4. Antonio Afonso & Ludger Schuknecht & Vito Tanzi, 2010. "Public sector efficiency: evidence for new EU member states and emerging markets," Applied Economics, Taylor & Francis Journals, vol. 42(17), pages 2147-2164.
    5. António Afonso & Sónia Fernandes, 2003. "Efficiency of Local Government Spending: Evidence for the Lisbon Region," Working Papers Department of Economics 2003/09, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    6. Àlexandr Knobel & Ilya Sokolov & Elizaveta Khudko, 2011. "The Impact of State Expenditure on the Quality of General Education in Russia," Research Paper Series, Gaidar Institute for Economic Policy, issue 152P.
    7. Jayasuriya, Ruwan & Wodon, Quentin, 2003. "Measuring and Explaining Country Efficiency in Improving Health and Education Indicators," MPRA Paper 11183, University Library of Munich, Germany.
    8. Aleksander Aristovnik, 2013. "Relative Efficiency of Education Expenditures in Eastern Europe: A Non-parametric Approach," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(3), pages 1-4, June.
    9. António Afonso & Ludger Schuknecht & Vito Tanzi, 2010. "Income distribution determinants and public spending efficiency," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(3), pages 367-389, September.
    10. repec:zbw:ifweej:201735 is not listed on IDEAS
    11. Gupta, Sanjeev & Verhoeven, Marijn, 2001. "The efficiency of government expenditure: experiences from Africa," Journal of Policy Modeling, Elsevier, vol. 23(4), pages 433-467, May.
    12. Onrubia-Fernández, Jorge & Fuentes, Antonio Jesús, 2017. "How costly are public sector inefficiencies? A theoretical framework for rationalising fiscal consolidations," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 11, pages 1-19.
    13. Ruwan Jayasuriya & Quentin Wodon, 2007. "Efficiency in Improving Health and Education Outcomes: Provincial and State-Level Estimates for Argentina and Mexico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 22(1), pages 57-97.
    14. Jorge Onrubia-Fernández & A. Jesús Sánchez-Fuentes, 2014. "How costly are the public sector ineffiencies? An integrated theoretical framework for its welfare assessment," Working Papers. Collection A: Public economics, governance and decentralization 1407, Universidade de Vigo, GEN - Governance and Economics research Network.
    15. Aleksander Aristovnik, 2014. "Relative Efficiency Of Primary Education: An International Comparison," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 8(1), pages 17-24.
    16. António Afonso & Miguel St. Aubyn, 2004. "Non-parametric Approaches to Education and Health Expenditure Efficiency in OECD Countries," Working Papers Department of Economics 2004/01, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    17. António Afonso & Ludger Schuknecht & Vito Tanzi, 2005. "Public sector efficiency: An international comparison," Public Choice, Springer, vol. 123(3), pages 321-347, June.
    18. World Bank, 2003. "Armenia : Public Expenditure Review," World Bank Other Operational Studies 13926, The World Bank.
    19. Christiaensen, Luc & Scott, Christopher & Wodon, Quentin, 2002. "Development Targets and Costs," MPRA Paper 12299, University Library of Munich, Germany.
    20. Christiaensen, Luc & Scott, Christopher & Wodon, Quentin, 2002. "Задачи Развития И Затраты
      [Development targets and costs]
      ," MPRA Paper 10495, University Library of Munich, Germany.
    21. Antonio Afonso & Carla Scaglioni, 2005. "Public Services Efficiency Provision in Italian Regions: a Non-Parametric Analysis," Working Papers Department of Economics 2005/02, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    22. Christiaensen, Luc & Scott, Christopher & Wodon, Quentin, 2002. "Metas y costos del desarrollo
      [Development Targets and Costs]
      ," MPRA Paper 10493, University Library of Munich, Germany.

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