Public spending efficiency, governance, and political and economic policies: is there a substantial causal relation? Evidence from selected MENA countries

Public spending efficiency, governance, and political and economic policies: is there a substantial causal relation? Evidence from selected MENA countries

This paper seeks a robust methodology for the estimation of the relative public spending efficiency of eleven Middle East and North Africa (MENA) countries over the period 1996-2011. Using the non-parametric Data Envelopment Analysis (DEA), the authors estimate relative efficiency scores for the four main disaggregated accounts of public spending: administration, health, education and infrastructure. Then, the Tobit regression model is used in the second part of the paper to determine the impact of governance and political and economic factors on public spending efficiency.

The results mainly show that Jordan is the most efficient in public spending on administration, education and health, and Tunisia on infrastructure; while Libya, Algeria and Yemen are relatively less efficient in public spending on administration and health.

Moreover, the results indicate that political stability, trade freedom and economic growth have a positive effect on public spending efficiency. Nevertheless, voice and accountability negatively affect the efficiency of public spending.

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