Cross-country analysis of public expenditures structure and efficiency

Abstract

The article is devoted to the problems of relationship between public expenditures and economic growth and methodical and practical problems of estimating expenditures efficiency. The authors note that productive expenditures (expenditures on human capital, social and economic infrastructure, research and development) have strong influence on economic growth. The comparative study of the effectiveness and efficiency of public expenditures was conducted, including productive expenditures (education and healthcare), for Russia and the sample of countries close to Russia by their economic development level. The indicators of the effectiveness and efficiency, econometric models, DEA method, and effectiveness and efficiency rankings based on them are used as measuring instruments in the study. According to the approach applied in the study, the rankings show relatively poor results for Russia in macroeconomic function performance of the public sector, in comparison to the other countries of the sample, but it is worth noting that the aggregated estimates are influenced by the selection of time period. Russia shows high results in education public expenditures efficiency and relatively poor results in healthcare public expenditures efficiency. Also, the productive expenditures level is low in Russia compared to the other countries close to Russia by their economic development level and OECD countries. This can limit economic growth in the mid-term and long-term prospects.