by Richard Dutu and Patrizio Sicari, OECD Economics Department
The falling ratios of workers to retirees in many OECD countries are jeopardising their old-age pension systems. Similarly, the rise in life expectancy and chronic medical conditions are pushing up health expenditures. Demand for education is also high, as productivity gains will need an increasingly educated workforce to be sustained.
While demand for public expenditure keeps rising, government spending in OECD economies was already at a record high of 45% of GDP in 2014, up from 35% in 1970 and 24% in 1937 (Tanzi and Schuknecht, 2000). Meeting those demands while keeping public spending under control will require improving public spending efficiency. But how efficient is public spending in the OECD exactly?
Efficiency in public expenditure can be measured via Data Envelopment Analysis (DEA) whereby a frontier of best-practice countries is constructed based on input-output data. Distance from the frontier measures potential…
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Utopia, you are standing in it! 
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