The efficiency of public expenditure in Malta

Abstract

Measuring public sector efficiency is not generally straightforward and presents a difficult empirical issue, specifically in terms of adequate measurement of costs and outcomes. This Country Focus attempts to measure the efficiency of public spending in Malta by applying two alternative non-parametric techniques: the Full Disposal Hull (FDH) and the Data Envelopment Analysis (DEA). The analysis is restricted to public spending on education and healthcare. Apart from their important contribution to welfare and economic growth, these two expenditure components together represent around 30% of total general government expenditure in Malta, suggesting that even incremental gains can lead to important improvements in budgetary resource allocations. For expenditure on education, the findings show that, whereas public expenditure in Malta appears relatively efficient at the primary and secondary levels of schooling, it is less so at the tertiary level. In the case of expenditure on health care, the results show that, even in the context of poor outcomes for the remaining Member States, the efficiency of public healthcare expenditure in Malta is weak