The effectiveness and efficiency of public spending

Abstract

This paper shows that the efficiency in public services more generally and in public spending on education and R&D in particular varies significantly between countries. The paper, however, also illustrates the difficulties of measuring efficiency and effectiveness. Progress has been made in developing the necessary measurement techniques, but there is a lack of suitable data to apply those techniques. Good quality data are needed because the techniques available to measure efficiency are sensitive to outliers and may be influenced by exogenous factors. Against this background, analyses based upon individual spending areas seem to be a more promising approach to measure efficiency and effectiveness on a cross-country basis.

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