Efficient and Effective Public Spending for Sustainable Economic Growth

Abstract

Nowadays, governments are more careful with the use of resources and attempt to be efficient and effective to achieve sustainable economic development. This paper contrasts the efficiency and effectiveness of public spending of developed and developing countries in current conditions and their impact on economic growth. 
 The author analyses efficiency and effectiveness measures of public spending applied by prominent cross-country empirical studies. The critical success factors for the effective performance of government through World Bank indicator of government effectiveness highlights the role of effective public budget policy. In addition, the Public Sector Performance Index and Public Sector Efficiency Index introduced by Vito Tanzi and other measures of Livio di Matteo, Konstantinos Angelopoulos are examined. Based on these approaches the author proposes several suggestions for the current condition of public budget policies of Central Asian countries and ways of improving the effectiveness and efficiency levels of their public sector. 
 The author argues that the assumption that developing countries are less efficient than developed countries are based on several efficiency variations: the size of government expenditure, a government budget composition, aid dependency, and weak institutions. What is more, findings suggest that countries with relatively small governments that use resources more efficiently tend to achieve higher levels of economic growth that is not always the case for all developed countries. These findings have important implications for assessing the government performance on economic growth.

The Efficiency of Educational and Healthcare public expenditures in Kosovo: A Data Envelopment Analysis Technique

“…However, measuring the performance and efficiency of public expenditure as an important part of fiscal policy used by the public sector has become one of the key issues in public finances and the subject of increasing economic literature (Heller & Hauner, 2006;Montes, et al, 2019). Many economists believe that public activities should generate maximum benefits for the population, and they also demand that the redistribution and use of economic resources towards predefined strategic priorities be efficient Azhykulova, 2015). Improving the efficiency of public expenditure not only helps to achieve and sustain fiscal discipline but also allows increased value for money by achieving better results with the same level of expenditure (Manddl, Dierx, & Ilzkovitz, 2008).…”

“…Whereas, Haunter and Kyobe (2008) emphasize that demographic, geographical, and corruption control play an important role in increasing the efficiency of public expenditure because different forms of its use have been shown to negatively affect the efficiency of public spending. Moreover, Azhykulova (2015) believes that countries that have an efficient public sector tend to have a much lower cost of economic growth, greater foreign investment attractiveness, more positive credit ratings, better public service delivery, encourage higher levels of human capital accumulation and acceleration of technological innovation.…”