Determinants of public sector efficiency: a panel database from a stochastic frontier analysis

Abstract

AbstractThis article provides a large dataset on PSE using a parametric approach, and covering 158 countries of all income levels, over the period 1990–2017. The analysis includes four sectors: education, health, infrastructure, and public administration. We further consider three efficiency indicators regarding the ‘Musgravian’ tasks for government: allocation, distribution, and stabilization. After computing the efficiency scores for our sample countries, we examine their determinants using a wide range of economic and institutional factors. Our key findings are that trade globalization, factor productivity, and institutional quality seem to be important determinants of total PSE. The results remain robust to alternative specifications and methods. Finally, we provide additional evidence by exploring the sensitivity of the main determinants to different country groups, considering the level of economic development, geographical regions, and fragile states.