Abstract
Efficiency and equity are cornerstone concepts in rational service delivery in the public sector. This paper benchmarks efficiency and equity in public spending on health, education and social protection in a broad group of Asian Development Bank (ADB) member economies with varying levels of development. We describe public expenditure trends in health, education and social protection in the region. Following Herrera and Pang (2005), we conduct a formal efficiency benchmarking exercise using Data Envelopment Analysis and available input and output data from WDI, GFS, and ADB databases to deconstruct each member economy’s efficiency changes in health and education spending. We next turn to review service provision inequality within ADB economies using utilization rates and benefit incidence, and note the deficiency of pro-poor spending in some sectors.
Highlights
The two major goals of public service spending are: (i) achieving targets (i.e., MDG goals) at the lowest cost through an optimal mix of inputs, that is, efficiency; and (ii) ensuring that public services reach those who need them most, such as the poorest segment of the population, or equity
Most of the literature on the efficiency of public expenditure focuses on analyzing this concept, on the cost differences of achieving a certain level of output which may be different across countries or across subcategories in a given sector
The paper analyzed the efficiency of health and education expenditure in Asian countries using Data Envelopment Analysis (DEA)
Summary
The two major goals of public service spending are: (i) achieving targets (i.e., MDG goals) at the lowest cost through an optimal mix of inputs, that is, efficiency; and (ii) ensuring that public services reach those who need them most, such as the poorest segment of the population, or equity. Allocative efficiency looks at finding the cost minimizing mix of inputs to achieve a certain level of output. Technical efficiency looks at minimizing the total cost of inputs to achieve a given level of output. Most of the literature on the efficiency of public expenditure focuses on analyzing this concept, on the cost differences of achieving a certain level of output which may be different across countries or across subcategories in a given sector
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