Measuring and explaining Government efficiency in developing countries

Governments in developing countries play an important role in the growth process, most notably through their budgetary policies. This potentially beneficial role is, however, hindered by gouvernment expenditure enefficiency. This is illustrated in a basic model of public spending and economic growth. Government efficiency is estimated for 52 developing countries using date envelopment analysis and subsequently employed in a general to specific approach in order to identify its determinants. We find government expenditure efficiency is primarily determined by structural country variables and governance indicators. Economic policy deteminants apparently count less. The Asian countries and low income European countries in the samplke have a significantly higer and lower efficiency, respectively