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Figure 7 – Theoretical production possibility frontier: one input, one output (excluding Singapore)

LVA CZ E

ML T

TUR

ZAF

THA MUS

IRL

CY P

PRT

GRC

KOR

CHL

ROM BGR

LTU POL

SV N

SV K HUN

ES T

MEX

BRA

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

0.0 10.0 20.0 30.0 40.0 50.0 60.0

Total spending-to-GDP ratio (%)

PSP indicator

BGR – Bulgaria; BRA – Brazil; CHL – Chile; CYP – Cyprus; CZE – Czech Republic; EST – Estonia; GRC – Greece; HUN – Hungary; IRL – Ireland;
KOR – Korea; LTU – Lithuania; LVA – Latvia; MEX – Mexico; MLT – Malta; MUS – Mauritius; POL – Poland; PRT – Portugal; ROM – Romania;
SVK - Slovak Republic; SVN – Slovenia; THA – Thailand; TUR – Turkey; ZAF – South Africa.

The above calculations could be seen as an approximation of potential direct costs of inefficiency in the
provision of public services. However, indirect costs, implying a higher loss for consumer welfare should
also be taken into account. This is outside the scope of our paper, but Afonso and Gaspar (2005) address
this issue.

We can now compare the results of our composite indicator analysis of performance and efficiency with
that of DEA analysis. Table 6 reports DEA input and output efficiency scores and ranks (as shown in
Table 4) together with PSE scores (from Table 3) and ranks. The two methods provide rather similar
results as reflected in very high correlation coefficients for scores and ranks across methods. This is
evidence for a certain robustness of our results.

Table 6 – Comparison of country scores and ranks across methods

DEA Analyis Public Sector Efficiency

(PSE)

Country Input oriented Output oriented

Score Rank Score Rank Score Rank

Brazil 0.381 22 0.488 22 0.69 23

Bulgaria 0.461 14 0.483 23 0.77 22

Chile 0.73 4 0.615 17 1.38 5

Cyprus 0.489 11 0.867 3 1.08 8

Czech Republic 0.439 15 0.637 13 0.85 17

Estonia 0.489 12 0.632 14 0.91 12

Greece 0.369 23 0.713 8 0.96 9

Hungary 0.355 24 0.687 9 0.85 17

Ireland 0.576 8 0.813 4 1.37 6

Korea 0.749 3 0.743 6 1.65 3