countries are often poorly targeted and benefit those with special interests rather than those in need
(Alesina (1998) and Schuknecht and Tanzi (2005)).
All in all the results suggest that efficiency differs enormously across countries. In the new member
states, a relatively average performance (PSP scores) in most countries is “bought” with too many inputs
so that efficiency (PSE) is low. In the next section, we will analyse whether these findings are confirmed
by using a DEA approach.
4.3. Relative efficiency analysis via a DEA approach
We used a DEA approach as described above, using as our output measure the PSP composite indicator
reported in Table 2 and as an input measure the total government spending as a ratio of GDP. Table 4
presents both the input and the output oriented efficiency coefficients of the variable returns to scale
analysis while the constant returns to scale coefficients are also reported for completeness.
The results largely confirm the findings of the earlier “macro” approach of determining efficiency of the
public sector. New member states are ranked between 9 and 24 on input scores and between 3 and 18 on
output scores, hence reflecting rather diverse and often below average efficiency. Two countries that also
had amongst the top PSE scores are located on the frontier: Singapore and Thailand. Korea, Chile and
Mauritius come next. Brazil, Greece and Hungary find themselves at the bottom of the list while most
new member states fill the middle ranks. From an input perspective the highest-ranking country uses 1/3
of the input that the bottom ranking one uses to attain a certain PSP score. The average input score of
0.55 hints to the possibility that, for the level of output they are attaining, countries could use around 45
per cent less resources.
From an output perspective, the top performer achieves twice as much output as the least efficient
country with the same input. The average output score of 0.67 implies that on average, for the level of
input they are using, the countries are only obtaining around 2/3 of the output they should deliver if they
were deemed efficient.
Table 4 – DEA results: one input, one outputCountry Input oriented Output oriented
VRS TE Rank VRS TE RankCRS TEBrazil 0.381 22 0.488 22 0.219
Bulgaria 0.461 14 0.483 23 0.262
Chile 0.730 4 0.615 17 0.529
Cyprus 0.489 11 0.867 3 0.454
Czech Republic 0.439 15 0.637 13 0.329
Estonia 0.489 12 0.632 14 0.364
Greece 0.369 23 0.713 8 0.307
Hungary 0.355 24 0.687 9 0.287
Ireland 0.576 8 0.813 4 0.517
Korea 0.749 3 0.743 6 0.639
Latvia 0.486 13 0.624 16 0.357
Lithuania 0.535 9 0.588 18 0.370
Malta 0.408 19 0.753 5 0.350
Mauritius 0.721 5 0.686 10 0.583
Mexico 0.703 6 0.551 19 0.456
Poland 0.412 18 0.627 15 0.304
Portugal 0.385 21 0.678 11 0.308
Romania 0.528 10 0.509 21 0.316
Singapore 1.000 1 1.000 1 1.000
Slovak Republic 0.406 20 0.674 12 0.322
Slovenia 0.431 16 0.731 7 0.364