Abstract
Public sector bureaucracies are key players in modern advanced economies, in particular for the smooth functioning of the roles assigned to the government sector, such as the provision and organization of welfare state services, and the implementation of the (economic) institutional framework, including as regards the tax code and the guarantees of legal certainty for economic agents. From this perspective, a proper functioning of bureaucratic bodies is crucial for potential growth. Thus, cross-country differences in the quality of bureaucracies can explain, to a large extent, differences in economic growth among them. The operation of self-interested bureaucracies, insofar as their objective function differs from the one of the benevolent social planner (government), can lead to regulatory capture, damaging efficiency and economic incentives, labor market misallocation, and inefficient fiscal policies. In this paper, first, we engage in a thorough review of the extant literature, framing the discussion of the main channels by means of a small-scale dynamic, stochastic general equilibrium model. Second, we provide an empirical exercise that illustrates the links between bureaucratic/institutional quality and economic growth.
Highlights
Introduction2Almost one hundred years after the publication of Weber’s work on bureaucracies (Weber, 1922), the debate about what should be its role in improving the welfare of societies still deserves a wide attention from the literature
Las burocracias del sector público son actores clave en las economías avanzadas, como en el caso de los países de la Unión Europea, para el buen funcionamiento de los papeles asignados a los gobiernos
Las diferencias entre países en la calidad de las burocracias pueden explicar las diferencias en el crecimiento económico
Summary
Almost one hundred years after the publication of Weber’s work on bureaucracies (Weber, 1922), the debate about what should be its role in improving the welfare of societies still deserves a wide attention from the literature. Its permanence over time provides an essential institutional memory, in the face of the transience of politicians, while its recruitment based on merit guarantees an impartial treatment of citizens and prevents corruption. From this perspective, a proper functioning of bureaucratic bodies is essential for the institutional framework to act correctly, and crucial for the economic and social functioning of a society.
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