Assessing Public Sector Efficiency: Issues and Methodologies

Research comparing public and private organizations has become more common, but questions remain as to whether differences in sector are significant or spurious. The research reported here, based on secondary data from a cross-national study of research units, examines differences in the performance of public and private sector units, controlling for a number of potentially confounding variables. Path analysis is used to `factor out "performance differences in public and private sector units. The findings suggest that sector context is not entirely a spurious function of such variables as size and technology, but itself makes a significant contribution to performance differences. It is further concluded that multiple criteria are important when seeking to measure R&D performance by sector. Public sector units appear advantaged with respect to certain activities and private sector ones with respect to others.

The main objective of this paper is to assess the efficiency of the European Union's public sector from a quality of governance approach, employing a two-step methodology. In the first stage, EU states' efficiency scores are determined using Data Envelopment Analysis. Once quantifying public efficiency, the second step of the methodology examines the determinants of efficiency using a quantile regression estimation technique, with an emphasis on demographic features, corruption, economic freedom, and governmental digitalization. The novelty is provided by the assessment of the public sector's efficiency and efficacy from a broader approach in order to determine the efficiency scores of European Union countries, as well as the key factors that may impact the public sector's performance. The main findings, namely that governance quality can be considered an important resource in analysing public performance and that human resources, freedom, democracy, corruption, and digitalization have an impact on efficiency, are important considerations not only for policymakers but also for society, researchers, and the academic community. Reform measures should strive to improve both the technical and democratic components of public institutions in order to more effectively and transparently allocate public resources, while taking into consideration local and national peculiarities.

This article examines the results of a study conducted of the top 100 public sector units in Sweden. These units are comprised of entities of government, municipalities, and county councils. The aim of the study was to examine and describe the commitment to codes of ethics in these Swedish public sector units. This article reports on the responses of those public sector units that possessed a code of ethics. The construct of commitment was measured by a consideration of the inputs, objectives and outputs of the code across six areas. The commitment to codes of ethics has an interest for those involved in the public sector in Sweden and society in general. Most public sector units are in the early stages of development and assimilation into overall ethics policies in code artefacts. On a specific level there are customized codes of ethics that are not always documented in a generic artefact. Theoretical and managerial implications are provided. Furthermore, suggestions for further research are proposed.

This paper examines the efficiency of the German hospital sector over time and the relative efficiency of public, welfare (both nonprofit) and private (for-profit) hospital sectors using data from the Federal Statistics Office of German hospitals. Efficiency scores were computed using data envelopment analysis. The absolute efficiency of the hospital sector as a whole was found to have improved between 1991 and 1996. In this comparison, the empirical results showed that the hospitals in the public and welfare sector are relatively more efficient than private hospitals. Our results suggest that public, welfare and private hospital sectors have different best-practice frontiers; and that public and welfare hospital sectors appear to use relatively fewer resources than private hospitals. These results suggest differences in quality of care arising from ownership.

Both the fourth industrial revolution (Industry 4.0) and its embedded technology diffusion exponentially progress and grow in terms of technical change and socioeconomic impact. The aim of this study was the evaluation of research and development efficiency in the public and private sectors in EU countries. The Data Envelopment Analysis (DEA) methodology, within which the slack-based model was applied, was used to achieve this aim. The Malmquist index (MI) was used to calculate changes in research and development efficiency during 2010/2013 and 2014/2017. The results present a decrease in total Research and Development (R&D) productivity in public and private sectors for an average of EU countries (28). However, Spain, Slovenia, and Portugal (in the public sector), and Ireland and Romania (in the private sector) revealed an increase of a total R&D productivity during 2010/2013 and 2014/2017 that was primarily influenced by an increase of technical efficiency (catch-up effect). Similarly, the results confirm the differences in R&D efficiency in private and public sectors in the European countries. The study’s results also provide a valuable platform for creators of national strategic and innovative investment and educational plans, and creators of relevant policies and create a platform for national and international benchmarking indicators.

While many developing countries have devolved public responsibilities to local governments in recent years, some studies have examined whether decentralization actually leads to greater public sector allocation efficiency. This paper approaches this question by assessing the efficiency of government expenditure on public sector under fiscal decentralization. The area of public expenditure is of great importance making the findings have strong implications with regard to public sector efficiency. We compute public sector performance (PSP) and public sector efficiency (PSE) indicators, comprising of composite and 9 sub indicators, for 33 provinces in Indonesia. The first 6 sub indicators are opportunity indicators that take into account education, health outcomes, poverty, gender equality, quality of public infrastructure (transportation and energy). 3 order indicators reflect the standard musgravian tasks for the government: allocation, distribution, and stabilization. The input and output efficiency of public sectors across provinces is then measured using a non-parametric production frontier technique. Free Disposable Hull (FDH) analysis is used to estimate the extent of slack in government expenditures. The study finds significant differences in PSP and PSE, which suggests a large potential for expenditure savings in many provinces. All these findings suggest diminishing marginal products of higher public spending. We also estimate a semi parametric model of the public sector production process by regressing FDH analysis output scores on non discretionary variables using the Tobit procedure. We show that inefficiency is strongly related to GDP per capita, human development index, and degree of fiscal dependence. The central message of this paper is that increasing budgetary allocations for public sector may not be the only or most effective way to increase public sector outcome, and that more attention should be given to increasing the efficiency of expenditure. Keywords: fiscal decentralization public sector performance, public sector efficiency, free disposable hull, Tobit

Claim settlement management is the one of the most important service that comes under the crucial quality of life insurance service. The objectives formulated in this study are to study the claims settlement practices of public and select private sector life insurance companies, India and to analyze the effect of claim settlement practices on the operating efficiency and profitability performance of public sector and select private sector life insurance companies, India. The exploratory research design is applied. The convenient sampling technique is used for selecting the companies from the life insurance industry which constitutes 87.07% share in the industry as per IRDA Annual report 2009–10. The LIC of India is the only one state owned firm in the public sector and ICICI Prudential Life Insurance, HDFC Life Insurance, SBI Life Insurance and Bajaj Allianz Life Insurance companies under private sector were taken as sample. The IRDA annual reports and the selected company annual reports from 2001–02 to 2012–13 were used for collecting the required data. The various benefits such as maturity benefits, death claims, annuity, etc., paid to the policy holders by the select public and private sector companies are analyzed. Operating efficiency of life insurance companies are calculated by using data envelopment analysis tool with the dea online software. The market share (MS), Return on Assets (ROA), Claim Settlement Ratio (CSR) and Claim Rejection Ratio (CRR) were calculated. These are analyzed by using statistical tools such as linear growth rates, compound annual growth rates, and coefficient of variance, mean and coefficient of correlation. The analyzed reveals that LIC of India is the industry leader not only in sale of policies but also in the benefit payments. In overall benefit payments among the select private sector life insurance companies, ICICI Prudential Life insurance was the top performer followed by HDFC Life insurance, Bajaj Allianz life insurance and SBI Life insurance. It is concluded that the claim settlement practices of life insurance industry had statistically significant impact on their profitability as well as operating efficiency. More-over, claim settlement practices of select life insurance players had statistically significant positive impact on the profitability but they had statistically significant negative impact on their operating efficiency due to increased operational risk for enhanced sales or more underwritten policies Hence companies should maintain optimum claim settlement practices to achieve good market share and profitability.

The ability to measure public sector performance is a necessity for policymakers as well as academics and citizens of a country. This article aims to identify ways of measuring public sector performance using the measurement applicable to all countries and outlining opportunities for comparability among them. Thus, the authors highlight opportunities for performance measurement and public sector efficiency using various methods of non-parametric and parametric analysis. The starting point of the analysis considers the concept of performance, encompasses the proposed terms of productivity, efficiency and effectiveness; therefore, the measurement of public sector performance requires an exhaustive analysis in multidimensional terms, covering all core areas of a country. Moreover, understanding and developing robust international comparison possibilities will give in practice a structural framework for measuring the performance of particular relevance. Study findings indicate that performance measurement and implicitly public sector efficiency is a complex and difficult task that goes beyond simply measuring of productivity and efficiency, and requires aggregation of several key areas related to the results of a state. In summary, the analysis framework of the performance and efficiency of public sector is outlined both in terms of relevance of indicators and the methodology used. It demonstrates that methods of non-parametric analysis work at their best when all aspects of the production process can be captured in a limited number of input and output dimensions.KEYWORDS: performance, efficiency, public sector, non-parametric methods, parametric methods.

Persistent inflation in Nigeria has raised concerns about the effectiveness of conventional macroeconomic policy instruments, motivating renewed attention to the role of governance and public sector performance in shaping price dynamics. This study investigates the extent to which public sector efficiency and bureaucratic structure influence inflation outcomes in Nigeria, beyond the effects of standard macroeconomic variables. The objective is to empirically examine the relationship between inflation and public sector efficiency, institutional quality, government regime type, interest rates, real economic output, and the nominal exchange rate. The analysis focuses on Nigeria from 1981 to 2024, incorporating key macroeconomic variables by alternating democratic and military regimes, structural reforms, and recurrent inflationary experiences. Methodologically, the study adopts an econometric time-series framework, modelling inflation as a function of public sector efficiency, institutional quality, regime dummy variables, interest rates, real gross domestic product, and the nominal exchange rate. The Autoregressive Distributed Lag (ARDL) approach alongside Granger causality tests, the study assesses both short-run and long-run relationships between institutional factors and economic performance, standard diagnostic tests and robustness checks are employed to ensure the reliability of results. The findings reveal that inefficiencies in the public sector and weak institutional quality significantly exacerbate inflationary pressures, while rigid bureaucratic structures constrain effective policy transmission. Interest rates and exchange rate movements are also found to be important channels through which governance weaknesses translate into persistent inflation. Based on these findings, the study recommends strengthening public sector efficiency through institutional reforms, bureaucratic streamlining, and improved policy coordination alongside monetary measures. It concludes that sustainable inflation control in Nigeria requires an integrated macro-institutional approach that addresses governance and bureaucratic constraints in tandem with conventional economic policy tools.

Combining ranking scales and selecting variables in the DEA context: The case of industrial branches

Even when a decision has been made about what the public sector should deliver, there is a need for knowledge about how the public sector's economy can be managed in the best possible way so that maximum benefit from the public sector activities is achieved, i.e. efficient use of the scarce resources. This requires first of all knowledge of management methods and management paths, as well as expertise of how to get the best possible data and make decisions based upon existing evidence. Emphasis is placed on being able to explain possible reasons for inefficient production, as well as methods for obtaining the best possible knowledge as a background for decisions and possible ways to influence citizens' behaviour, for example, through nudging. This presentation includes the theoretical understanding of the principal–agent relationship, how to make the most effective choices, as well as briefly at how behavioural economics not only can be used internally in the public sector, but also at how it can be a way of influencing citizens' behaviour.

The article analyzes the issues of efficiency, with special emphasis on measuring it in public sector units. The reason behind establishing units of the public finance sector is to satisfy the needs of the society, whereas the expenses paid to satisfy those needs are financed from public means. The measurement of the efficiency of such units is an important element used for assessing the degree of accomplishment of public tasks. The article offers a review of the issue and attempts at characterizing selected efficiency measures used in the units of the public fi-nance sector.

The Saudi Institute of Internal Auditors aims at developing the position of (the status and effectiveness) internal auditing in Saudi Arabia. One goal of the Institute is to provide the international internal auditing criteria, ethics and other relevant guidelines pertaining to internal auditing, as issued by the International Institute for Internal Auditing. This paper investigates whether the professional and legislative efforts in this regard have been well founded and successful. The professional and legislative efforts are, by nature, theoretical, and thus stop short of achieving the desired results which can only be achieved by putting the innovation efforts into practice. This study aims at elucidating the degree of implementation of these innovations by examining the perceptions of the directors of internal auditing departments in the Saudi public sector. The findings suggest that there is a lack of independence of the internal audit functions at public sector units, as well as a dearth of professionalism which may have a negative effect on the quality of the internal auditing function. This may hinder external auditors’ job when reviewing financial reporting. The results also point to some of the challenges relating to auditing that the Saudi public sector may face in future.

This paper uses both the stochastic and nonstochastic production function approach to measure technical efficiency in public education in Utah.The stochastic specification estimates technical efficiency, assuming half normal and exponential distributions.The nonstochastic specification uses two-stage DEA to separate the effects of fixed inputs on the measure of technical efficiency.The empirical analysis shows substantial variation in efficiency among school districts.While these measures are insensitive to the specific distributional assumptions about the one-sided component of the error term in stochastic specification, they are sensitive to the treatment of fixed socioeconomic inputs in the two-stage DEA.

Data envelopment analysis has become an important technique for modelling the relationship between inputs and outputs in the production process, particularly in the public sector. However, whenever measures of the output of public sector activity receive public attention, there is a strong possibility that there will be a feedback from the achieved output to the resources devoted to the activity. In other words, the level of resources is endogenous. The implications of such endogeneity for standard econometric estimation techniques are well known, and methods exist to deal with the problem. Most commentators have assumed that endogeneity poses no analogous problems for DEA because the technique merely places an envelope around feasible production possibilities. Using Monte Carlo simulation techniques, however, this paper shows that the efficiency estimates generated by DEA in the presence of endogeneity can be subject to bias, in the sense that inefficient units using low levels of the endogenous resource may be set tougher efficiency targets than equally inefficient units using more of the resource, particularly when sample sizes are small. The paper concludes that, in such circumstances, great caution should be exercised when comparing efficiency measures for units using different levels of the endogenous input.