Efficiency of Public Spending in Education, Health, and Infrastructure

Governments of developing countries typically spend between 20 and 30 percent of gross domestic product. Hence, small changes in the efficiency of public spending could have a major impact on aggregate productivity growth and gross domestic product levels. Therefore, measuring efficiency and comparing input-output combinations of different decision-making units becomes a central challenge. This paper gauges efficiency as the distance between observed input-output combinations and an efficiency frontier estimated by means of the Free Disposal Hull and Data Envelopment Analysis techniques. Input-inefficiency (excess input consumption to achieve a level of output) and output-inefficiency (output shortfall for a given level of inputs) are scored in a sample of 175 countries using data from 2006–16 on education, health, and infrastructure. The paper verifies empirical regularities of the cross-country variation in efficiency, showing a negative association between efficiency and spending levels and the ratio of public-to-private financing of the service provision. Other variables, such as inequality, urbanization, and aid dependency, show mixed results. The efficiency of capital spending is correlated with the quality of governance indicators, especially regulatory quality (positively) and perception of corruption (negatively). Although no causality may be inferred from this exercise, it points at different factors to understand why some countries might need more resources than others to achieve similar education, health, and infrastructure outcomes.

Type: 
Time Series
Topics: 
Education
Health, Nutrition and Population
Economy Coverage: 
Blend
High Income
IBRD
IDA
Low Income
Lower Middle Income
Upper Middle Income
Languages Supported: 
English
Number of Economies: 
175
Geographical Coverage: 
World
East Asia & Pacific
American Samoa
Australia
Brunei Darussalam
Cambodia
China
Cook Islands
Fiji
French Polynesia
Guam
Hong Kong SAR, China
Indonesia
Japan
Kiribati
Korea, Dem. People's Rep.
Korea, Rep.
Lao PDR
Macao SAR, China
Malaysia
Marshall Islands
Micronesia, Fed. Sts.
Mongolia
Myanmar
Nauru
New Caledonia
New Zealand
Niue
Northern Mariana Islands
Palau
Papua New Guinea
Philippines
Samoa
Singapore
Solomon Islands
Taiwan, China
Thailand
Timor-Leste
Tonga
Tuvalu
Vanuatu
Vietnam
Europe & Central Asia
Albania
Andorra
Armenia
Austria
Azerbaijan
Belarus
Belgium
Bosnia and Herzegovina
Bulgaria
Channel Islands
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Faroe Islands
Finland
France
Georgia
Germany
Gibraltar
Greece
Greenland
Hungary
Iceland
Ireland
Isle of Man
Italy
Kazakhstan
Kosovo
Kyrgyz Republic
Latvia
Liechtenstein
Lithuania
Luxembourg
Macedonia, FYR
Moldova
Monaco
Montenegro
Netherlands
Norway
Poland
Portugal
Romania
Russian Federation
San Marino
Serbia
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
Tajikistan
Turkey
Turkmenistan
Ukraine
United Kingdom
Uzbekistan
Latin America & Caribbean
Anguilla
Antigua and Barbuda
Aruba
Argentina
Bahamas, The
Barbados
Belize
Bolivia
Brazil
British Virgin Islands
Cayman Islands
Chile
Costa Rica
Colombia
Cuba
Curaçao
Dominica
Dominican Republic
Ecuador
El Salvador
Grenada
Guatemala
Guyana
Haiti
Honduras
Jamaica
Martinique
Mexico
Montserrat
Netherlands Antilles
Nicaragua
Panama
Paraguay
Peru
Puerto Rico
Sint Maarten (Dutch part)
St. Barthélemy
St. Kitts and Nevis
St. Martin (French part)
St. Lucia
St. Vincent and the Grenadines
Suriname
Trinidad and Tobago
Turks and Caicos Islands
Uruguay
Venezuela, RB
Virgin Islands (U.S.)
Middle East & North Africa
Algeria
Bahrain
Egypt, Arab Rep.
Djibouti
Iraq
Iran, Islamic Rep.
Israel
Jordan
Kuwait
Lebanon
Libya
Malta
Morocco
Oman
Qatar
Saudi Arabia
Syrian Arab Republic
West Bank and Gaza
United Arab Emirates
Tunisia
Yemen, Rep.
North America
Bermuda
Canada
United States
South Asia
Afghanistan
Bangladesh
Bhutan
India
Pakistan
Nepal
Maldives
Sri Lanka
Sub-Saharan Africa
Angola
Benin
Botswana
Burkina Faso
Burundi
Cabo Verde
Cameroon
Central African Republic
Chad
Comoros
Congo, Dem. Rep.
Congo, Rep.
Côte d'Ivoire
Ethiopia
Eritrea
Equatorial Guinea
Gabon
Gambia, The
Ghana
Guinea
Guinea-Bissau
Kenya
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Mauritius
Mozambique
Namibia
Niger
Nigeria
Reunion
Rwanda
São Tomé and Principe
Seychelles
Senegal
Sierra Leone
Somalia
South Africa
South Sudan
Sudan
Swaziland
Tanzania
Togo
Uganda
Zambia
Zimbabwe
External Contact Email: 
research@worldbank.org
Access Options:
Download
Temporal Coverage: 
2006 - 2016
Release Date: 
September 13, 2018

Last Updated

Last Updated: 
September 14, 2018

No Visualizations Available.

Governments of developing countries typically spend between 20 and 30 percent of gross domestic product. Hence, small changes in the efficiency of public spending could have a major impact on aggregate productivity growth and gross domestic product levels. Therefore, measuring efficiency and comparing input-output combinations of different decision-making units becomes a central challenge. This paper gauges efficiency as the distance between observed input-output combinations and an efficiency frontier estimated by means of the Free Disposal Hull and Data Envelopment Analysis techniques. Input-inefficiency (excess input consumption to achieve a level of output) and output-inefficiency (output shortfall for a given level of inputs) are scored in a sample of 175 countries using data from 2006–16 on education, health, and infrastructure. The paper verifies empirical regularities of the cross-country variation in efficiency, showing a negative association between efficiency and spending levels and the ratio of public-to-private financing of the service provision. Other variables, such as inequality, urbanization, and aid dependency, show mixed results. The efficiency of capital spending is correlated with the quality of governance indicators, especially regulatory quality (positively) and perception of corruption (negatively). Although no causality may be inferred from this exercise, it points at different factors to understand why some countries might need more resources than others to achieve similar education, health, and infrastructure outcomes.

Data Resources

Dataset Info

These fields are compatible with DCAT, an RDF vocabulary designed to facilitate interoperability between data catalogs published on the Web.
FieldValue
Groups audience
Modified Date
2018-09-14
Release Date
December 31,1969
Periodicity
Annual
Identifier
0e88b524-0984-4426-9a45-52637601200b
License
License Not Specified
Temporal Coverage
Temporal Coverage: 
2006 - 2016
Rating: 
0
No votes yet
Type: 
Languages Supported: 
Number of Economies: 
175
Geographical Coverage: 
Data Classification of a Dataset: 
Start Date: 
Sunday, January 1, 2006
End Date: 
Saturday, December 31, 2016
GMT
Programatic Region: 
Release Date: 
Thursday, September 13, 2018
Last Updated Date: 
Friday, September 14, 2018
External Contact Email: 
research@worldbank.org
Granularity: 
Modified date: 
17787
Primary Dataset: 
Yes

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