Santiago Herrera|Gaobo Pang
Efficiency of Public Spending in Developing Countries: An Efficiency Frontier Approach
governments developing countries typically spend 15 30 percent gdp hence small changes efficiency public spending could major impact gdp attainment governments objectives first challenge stakeholders face measuring efficiency paper attempts quantification two major parts first one estimates efficiency distance observed inputoutput combinations efficiency frontier defined maximum attainable output given level inputs frontier estimated several health education output indicators means free disposable hull fdh data envelopment analysis dea techniques inputinefficiency excess input consumption achieve level output outputinefficiency output shortfall given level inputs scored sample 140 countries using data 1996 2002 second part paper seeks statistically verify empirical regularities crosscountry variation efficiency results show countries higher expenditure levels register lower efficiency scores well countries wage bill larger share governments budget similarly countries higher ratios public private financing service provision score lower efficiency countries plagued hivaids epidemic higher income inequality countries higher aiddependency ratios also tend score lower efficiency probably due volatility type funding impedes medium term planning budgeting though causality may inferred exercise points different factors understand countries might need resources others achieve similar educational health outcomes