Efficiency of Public Expenditure: Review and Preliminary Results for Romania

Abstract

The issue of public spending efficiency is a current one in the majority of countries, especially for those confronting large negative effects derived from recent crisis. In Romania, some arrangements were recorded lately in order to reduce costs in government sectors. Thus, we evaluated the performance and efficiency level in Romanian public sector, both in aggregate and disaggregated terms. Our analysis is based on a methodology recently developed in the area. The results on composites indicators allow to place Romania above average in terms of public sector efficiency, but in a very heterogeneous situation in structure: total public spending is highly efficient in generate economic performance, while it is highly inefficient in insuring stability in the same period 2001-2012. Our findings are useful for government to set intervention priorities in order to improve efficiency in the most inefficient sectors. One special case is that of social public expenditures, whose impact on income distribution has weakened lately requiring the reorganization of the social public spending system.