Efficiency of public spending in education, health, and infrastructure: an international benchmarking exercise

Abstract

This paper gauges public spending efficiency on human and physical capital formation using non-parametric methods. Input-inefficiency and output-inefficiency are scored across 195 countries using 2010-2020 data. The consistent methodology allows within-country comparison of efficiency across sectors. Developing countries show lower efficiency in infrastructure spending, moderate efficiency in education, and higher efficiency in health spending. Comparisons with previous studies indicate significant efficiency gains over time in human capital spending. The efficiency gap between human and physical capital spending suggests better project selection and management in infrastructure are central to the development agenda. The paper verifies empirical regularities in cross-country efficiency variations, finding negative associations between efficiency and spending levels and positive associations with governance quality indicators. This analysis helps explain why some countries might need more resources than others to achieve similar development outcomes.